For the first time since 1998, every S&P sector is on pace to post back-to-back monthly gains.
Of course, in 1998 the S&P groupings looked a little different than they do today. Today, there are 11 sectors. Back then, there were 10. Real estate wasn’t a sector, and what’s now communications services was still called telecommunications.
Still, it’s been 21 years since all sectors posted two-consecutive months of gains.
Industrial stocks have firmly led the way this year, rising more than 18 percent. And after looking at the charts Miller Tabak’s Matt Maley says this is still the place to be.
“You look at the S&P industrial stock index and it’s made a very nice higher high,” he said Thursday on CNBC’s “Trading Nation.”
“The whole market along with the industrials tried to rally three different times in the fourth quarter, and each different month … it stalled out. Well the industrials index, it’s broken above all three of those highs, so it’s seen a nice major breakout here.”
Given the sector’s outsized gain — it has bounced 26 percent from its December low — Maley says it looks “a little overbought nearer term,” but this kind of “momentum” should “keep it going for a while.”
He also likes the tech space because while it’s rallied 14 percent in 2019, it’s still 7 percent below its October all-time high. According to Maley the rally is much broader-based this time.
“Lat year it was all the FANG stocks and a few others like Nvidia. But this time you’re seeing some of these FANG stocks not acting particularly well and yet you’re having the chip names and some of those other names hold the index just as high as it had been last year, so that’s a nice positive thing,” he said.
Michael Bapis, managing director of Vios Advisors at Rockefeller Capital Management, agreed, saying he still believes in the technology space. “The companies in the technology space who haven’t performed, they’re starting to perform,” he said.
Bapis is also watching health care since he thinks the combination of an aging population and technological advances within the industry will drive these stocks to new highs.
“We’re looking for a positive return going through the end of this year,” he said of the sector, which is the worst-performing S&P sector this year, gaining just 6 percent.
Maley also has his eye on a relative under-performer — utilities. That sector is the second-worst performer after health care, after notching a 7 percent gain for the year. He argues that from a technical standpoint, it looks like it may be on the verge of a breakout.
It’s “bumping up” against its “double top all-time high” from late 2017 and late 2018, and if it can break above that high it’s “going to gain some momentum.”
While it may seem like smooth sailing from here given the rate at which stocks have bounced back, Bapis did note that markets may not be out of the woods just yet.
“Keep an eye on earnings expectations and if companies meet those earnings numbers. That’s going to be huge,” he said.