Charts: Forget Waiting for Banks, Buy Commodities

The banking sector has shrunk to a fraction of its former size and there is still no end in sight for the massive declines, but the prospects for the commodity sector are far better, Robin Griffiths, technical strategist at Cazenove Capital, told CNBC.

The “commodity space is where we’ve got better fundamentals and better chart patterns than in the financial area,” he said.

Banking stocks have “looked so terrible for so long we can now say they’re not a very big sector,” Griffiths said.

“There’s nothing even faintly resembling a low,” Griffiths said when looking at the PHLX KBW Bank Sector Index.

“It’s still in steep bear market,” he added.

The index, which includes high-profile banks such as Bank of America and Citigroup, has lost around 70 percent in the last twelve months. But a further decline of 10 or 20 percent still wouldn’t give a clear “buy” signal, according to Griffiths.

Uncertainly about earnings is weighing on the sector, but there are some smaller players that could emerge from the crisis better, said Griffiths.

“The ones needing to talk to government -- the management don’t get it yet -- those are the ones to avoid,” he added.

As the banking sector’s weighting on global stock indexes continues to diminish, the commodity space points to a robust future with growing importance for the overall market, Griffiths told CNBC.

“We’ve got a low on the oil price now, you’re definitely going to get a rally in the price of oil and oil majors,” he said.

Oil giants such as Total, Shell and Exxon look good from a technical perspective, Griffiths said.

They are “good franchises, they’re not going to go away, they do pay dividends,” he added.

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