It might be time to leave the telecom sector: Analysts

Telecom giants AT&T and Verizon have enjoyed a great run this year, rising 14 percent and 11 percent respectively. But some traders argue that it's about time to hang up on telecom stocks.

"Flow in AT&T and Verizon, particularly in the options, has become more balanced [when] it used to be very bullish," Stacey Gilbert, head of derivative strategy at Susquehanna, said Monday on CNBC's "Power Lunch."

In addition, the Vanguard ETF tracking telecom stocks (which largely just tracks the aforementioned two) has seen some $500 million worth of inflows this year, according to ETF.com. But as Gilbert points out, those flows are drying up.

"I think the love fest is dying here," she said.

Among the parties that have departed the telecoms are Warren Buffett's Berkshire Hathaway, which sold out of its AT&T holding as of the end of the first quarter, according to a filing released Monday.

Rich Ross, a technical analyst with Evercore ISI, said investors would do well to follow Berkshire out of the name. According to his work, AT&T's chart has already made a "double top," indicating that a drop could be ahead.

One of the biggest drivers for AT&T is the yield environment; the stock has a dividend yield of nearly 5 percent, making it a bond proxy of sorts. But Ross points out that yields right now are around the same level they were at in spring of 2013, which was followed by a substantial rate rise, and a consequent slide in shares of AT&T.

"That type of symmetry keeps me on the sidelines," Ross said Monday on "Power Lunch." "It makes me a better seller at the tail end of a very strong surge in telephone into that historical resistance."

Read MoreVerizon launches trial of mobile video service in test for telecom industry


Trades to Watch

Trader Bios


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.

Read more