European shares dropped on Friday after an unexpected pullback in German industrial output
Could this be a bearish sign for Germany's blue-chip DAX stock index, a beloved trade that's up 20 percent this year, but remains seven percent below its record high reached in April.
Kevin Kelly, manages the Recon Capital DAX Germany ETF, which tracks the thirty largest securities traded on the DAX.
"Germany remains Europe's strongest market economically and is further impacted by rising consumer confidence, bolstered by an improving labor market and lower energy prices."
Kelly's top pick is Fresenius , which provides products and services for hospitals, plus inpatient and outpatient medical care.
"Fresenius is in the hottest" sector on the planet right now," said Kelly. "Plus they are benefitting from Obamacare."
Fresenius shares are up 51.05 percent year to date and 76.73 percent over the past year.
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Kelly is also long Germany's health care giant, Bayer AG, .
"The stock is up 20 percent this year, beating rivals Novartis, Roche and GlaxoSmithKline," said Kelly. "Bayer also reinforced guidance, and its drug development pipeline is strong in the areas of heart disease, cancer, hematology and gynecology."
German automakers is one sector Kelly is shorting "We are completely avoiding autos, BMW, Daimler, Volkswagen , due to a potential slowdown in China and outlook for the auto sector overall," said Kelly.