Tech could be your best bet in the new year, says one technical analyst.
The technology sector hit a fresh new high in Friday trading, and is now the best performing sector so far in 2017. As the mega-cap leaders in the group gain momentum, Ari Wald of Oppenheimer believes technology "is going to resume its longer-term trend of outperformance."
"We constantly preach that rather than market timing, you always want to consistently buy the sectors and stocks with the best relative trends, and we think tech has the best relative trends in the market right now," Wald said Thursday on CNBC's "Trading Nation."
The tech sector is up over 4 percent since the U.S. election, while the S&P 500 is up over 6 percent in the same time. But the underperformance has come into its prior breakout point at its rising 200-day moving average, said Wald. And that indicates to him that the sector will resume its longer-term uptrend that's in place. He expects technology to be a market leader once again over the coming months. The technology sector on Friday hit its highest levels since September 2000.
According to Eddy Elfenbein, editor of the Crossing Wall Street blog, earnings from big tech names over the coming weeks will show "greater division" between some of the tech winners and losers.
Elfenbein expects a "big earnings beat" from Microsoft when it reports on Jan. 26. He owns Microsoft in one of his funds; he also likes information technology company Cognizant Technology Solutions at this juncture.
"I think overall, this is a good environment for the tech sector," he said.