Charts & fundamentals shine on this sector: Traders

Health care has been the best-performing S&P 500 sector in the past week, rising 2 percent. And according to some traders, now is the time to buy.

Erin Gibbs, equity chief investment officer of S&P Investment Advisory Services, said she expects the sector strength to continue in 2015 and that health care is the only S&P sector currently forecast to see three years of double-digit growth.

"This has the absolute strongest growth for not only for the past two years, but also one of the strongest sectors going forward," Gibbs said Monday on CNBC's "Power Lunch." "They simply don't have the deflationary pressures that we are seeing in a lot of other industries."

In addition, Gibbs said, health-care stocks are currently trading at an attractive valuation of 16.4 times forward earnings. In comparison, she said, the S&P 500 is trading at 17.2 forward earnings.

"Any time the sector has traded below 17 times forward earnings in the past two years has been a value," Gibbs said.

Health-care stocks have seen a pullback in the past month spurred by a sell-off in biotech stocks, which are down about 5 percent in one month.

Read MoreBiotech blues: political noise or correction?

However, technician Ari Wald of Oppenheimer said he sees the sector rising another 5 percent to return to the July breakdown level around 850. The sector also hit an all-time high in July at 892.

"It's very deeply oversold. This is where we'd expect it to stabilize," Wald said Monday on "Power Lunch."

Wald said the sector at its most oversold level since 2011, with about 30 percent of health-care stocks in an uptrend.

"There's still a lot of contrarian fuel here to help a bit of a relief rally," he said.

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Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's “Closing Bell (M-F, 3PM-5PM ET).   In addition, he contributes to CNBCand CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

Follow Michael Santoli on Twitter @michaelsantoli

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