Of the two sectors sitting on 20%+ rallies, one could be a much better pick

Two sectors in the S&P 500 have gained at least 20 percent so far this year, but some technical analysts and strategists believe that one is the far better pick for investors now.

The information technology and health-care sectors have risen by 25 percent and 20 percent year to date, respectively, making them the market's best performers.

Yet going forward, health care will begin to see great political pressure, said Boris Schlossberg, BK Asset Management's managing director of foreign exchange strategy.

Schlossberg said he much prefers technology stocks at this juncture.

"I have been long tech since the beginning of the year," he said Wednesday on CNBC's "Power Lunch." "I think it's a secular story; tech is the future. It's basically disrupting everything in our sight, and health care, I think, is going to be under a tremendous amount of stress for rationalization of cost."

Specifically, Schlossberg pointed to Sen. Bernie Sanders' Wednesday announcement in which he unveiled his single-payer "Medicare for All" bill, which has 16 Democratic co-sponsors. If passed, the proposed legislation would eventually cover every U.S. resident.

The bill, Schlossberg said, is "just the beginning" of pressure around proposed changes to health-care policy in the Trump administration, adding, "I think it's going to present a lot of problems for the industry, which is 20 percent of GDP … so I'm all tech, no health care."

While the technology sector has proven to be the market leader, the XLV (the S&P healthcare-tracking exchange-traded fund) has been picking up in overall performance, said Craig Johnson, chief market technician at Piper Jaffray.

Both the XLV and the XLK (the S&P technology-tracking exchange-traded fund) are "both trending very well," but he would rather be in technology.

"Our pick is to stay long the XLK … and the leadership of this market has been the 'FANG' stocks. We would stay long tech into year end," Johnson said Wednesday on "Power Lunch."

The IT sector was trading slightly lower on Thursday, and health care was trading slightly higher.


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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.

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