This 'under-loved' sector could soon rally: Technician

Financials stocks got a boost Friday after a stronger-than-expected jobs number increased the likelihood of a December Fed rate hike. And according to one top technician, the gains could just be starting.

"You could do a lot worse than the financials; in fact it's hard to do much better in this environment," said Evercore ISI's head of technical analysis, Rich Ross on CNBC's "Trading Nation."

The Bureau of Labor Statistics reported a growth in nonfarm payrolls of 271,000 for October, handily beating estimates of 180,000. U.S. banks rallied across the board after the announcement, with Morgan Stanley and Bank of America leading the surge higher.

Ross said the financials sector on the whole has been "under-loved, under-owned and over-regulated," but he said those characteristics could change as expectations for a rate hike increase.

Read MoreBlowout jobs report puts ball back in Fed's court

"You're well below prior highs here. I think that sets you up for a nice relative value trade," he said. "I think you want to be a buyer of the XLF and the financials more broadly speaking."

The financials ETF, the XLF, has lagged the broader market this year, and is hovering around the flat line for 2015. Ross said the chart looks constructive though, pointing to a "double bottom base of support" and a "breakout above the 200-day moving average."

Technicians often look to moves above the 200-day moving average as confirmation of a stock's direction.

Gina Sanchez of Chantico Global agreed that a rate hike would be "great news for the financials," but cautioned investors to "know what you own" before buying the financials ETF.

"The XLF also has REITs in it, and REITs are actually very sensitive and they have been selling off," she said, pointing to exposure within the ETF to real estate investment trusts.

The XLF closed higher by 1 percent on Friday, and is up more than 7 percent in the past month. Banks comprise more than 16 percent of the S&P 500, making it the second-biggest sector behind tech.

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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.

Sara Eisen

Sara Eisen joined CNBC in December 2013 as a correspondent, focusing on the global consumer. She is co-anchor of the 10AM ET hour of CNBC's "Squawk on the Street" (M-F, 9AM-11AM ET), broadcast from Post 9 at the New York Stock Exchange.

In March 2018, Eisen was named co-anchor of CNBC's "Power Lunch" (M-F, 1PM-3PM ET), which broadcasts from CNBC Global Headquarters in Englewood Cliffs, N.J.

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