Year to date, the industrials have been the third-worst sector out of the 10 in the S&P 500. Returning just 3.9 percent, industrials have underperformed the broader market index's 8.8 percent in 2014.
But investors should pay very close to the charts of General Electric, according to Joe Digiammo, global head of equities at Mischler Financial Group. That's because GE may have just crossed above an important technical level that may take the rest of the industrials sector with it.
GE is particularly important to the ETF that tracks the industrials sector (trading under the symbol XLI) as it is 10.18 percent of the ETF's holdings. Likewise, "If you are making a play on the XLI, you are by a certain extension making a play or asserting an opinion on GE," said Digiammo.
And, on the technicals for GE, he said he believes there is a very positive sign. Namely, Digiammo sees a bullish reverse head and shoulders pattern that began to form this past June. That pattern has $26.25 per share as its neckline; the conglomerate's stock closed at $26.21 on Thursday.
A break above $26.25 "accomplishes two things from a technical perspective," Digiammo said. "It confirms a break of the downtrend line dating back to late May/early June and it confirms a break of the 200-day moving average, which also happens to coincide with the neckline of this chart."
But there's also another factor making industrials like GE attractive to Digiammo. "Forty-five percent of global bonds are trading below 1 percent in terms of yield," he said. Contrast that to the industrial sector, which as a whole yields 2.1 percent.
That's attractive to "an aging population that is clearly on a yield grab—they don't have enough to retire," said Digiammo. With General Electric yielding 3.4 percent, "from an income perspective, from what I think is the new centerpiece of retirement portfolios and on a relative value play … [GE] is going to outperform."
To see the full interview, with Digiammo on General Electric and the industrials sector, watch the above video.