This sector is setting up for a rally

Call it the "Citigroup effect."

The Financial SPDR ETF (XLF) saw a nice boost Monday on the heels of a Citigroup earnings beat. The sector was up half a percent, while Citi shares shot up around 4 percent.

The news is welcome relief to investors, who will see a slew of other financial companies release results this week, including Bank of America, Northern Trust, Comerica, U.S. Bancorp, PNC Financial, Huntington Bancshares, American Express, Capital One, BlackRock, Goldman Sachs, Morgan Stanley, BB&T and KeyCorp.

(Read: Wall St rises on Citi earnings, retail sales data)

So will financials lead us higher, and is it safe to put your money in the banks?

"We're in the camp that they [financials will] lead us lower," said Carter Worth of Sterne Agee, who noted that financials have underperformed the broader S&P 500 in six of the last eight months. "We think we are at the or near top of the [trend] channel and we are likely headed down to $20 in the XLF, which is around 5 percent down from here. We're sellers," Worth added.

But the fundamentals paint a different picture, at least according to one portfolio manager.

(Watch: Key investor: Citi's stock is 'ridiculously cheap')

"I think you can bank on this sector," said John Stephenson of First Asset Investment Management. "Look at Warren Buffett, he loves Bank of America, and if he does, why isn't everyone betting on it?"
Stephenson sees nothing but positives coming from the sector. "I think this is a group that absolutely must be bought on valuation, improving consumer trends, good retail sales today. Everything is looking up. This is definitely a group you want to own."

For more on financials, check out the video where Worth and Stephenson duke it out on CNBC's "Street Signs."

Disclosure: Stephenson and First Asset own shares in Citigroup, JPMorgan and Bank of America.

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