This chart shows the bull market just got healthier

Published Mon, Aug 8 20164:29 PM EDT

The latest leg up in the S & P 500 has been propelled by lagging cyclical groups like technology and banks, a healthy development that could bode well for the strength of this bull market, said one chart analyst. "While it is easy to say the market is 'overbought,' or 'due for a pause,' the rotation beneath the surface from defensive to cyclical sectors is constructive, and therefore we maintain our bullish view," MKM Partners' chief market technician, Jonathan Krinsky, wrote in a recent note to clients. As a result, the strategist recommends investors use the recent transition as an opportunity to sell high dividend yield sectors like consumer staples, telecoms and utilities, and instead buy selectively in groups such as financials and tech. Source: MKM Partners In the past month, technology and financial stocks are the two best-performing sectors in the S & P 500, with both up more than 4.7 percent, shows MKM. Other groups like materials and industrials are also leading the way. On the contrary, the best-performing groups this year, telecoms, consumer staples and utilities, are all trading in negative territory. "This is constructive action for the ongoing uptrend, in our view," said Krinsky. One area where investors must focus on is the financial sector, which according to Krinsky's chart analysis, is poised to move higher. Source: MKM Partners "The KBW Bank Index is attempting to break out of a one-year downtrend, and while it is still early to say banks are relative leaders, we see enough evidence to begin buying the stronger bank stocks," said Krinsky. The analyst is bullish on regional banks such as Zions Bancorp Regions Financial , Wintrust Financial and BB & T . He also likes large-cap companies such as JPMorgan and Comerica . "While the action in banks has been pretty lousy for the last two years, the weekly chart could be viewed as a healthy consolidation above the prior breakout point," he said. Two other industry groups that are poised to benefit from this trend, according to the analyst, are capital market stocks and insurance companies. Some of the stocks he recommends in those sectors include BlackRock , Eaton Vance , Northern Trust , State Street , Progressive and Principal Financial Group .

Rafael Marchante | Reuters

The latest leg up in the has been propelled by lagging cyclical groups like technology and banks, a healthy development that could bode well for the strength of this bull market, said one chart analyst.

"While it is easy to say the market is 'overbought,' or 'due for a pause,' the rotation beneath the surface from defensive to cyclical sectors is constructive, and therefore we maintain our bullish view," MKM Partners' chief market technician, Jonathan Krinsky, wrote in a recent note to clients.

As a result, the strategist recommends investors use the recent transition as an opportunity to sell high dividend yield sectors like consumer staples, telecoms and utilities, and instead buy selectively in groups such as financials and tech.