Three charts are creating the perfect storm for more records, says technician

It's been the best start to the year since 2006 for the S&P 500 and Nasdaq, with new records and five days of gains already on the books.

That winning streak, an extension of a killer 2017, is set to continue, according to one market bull.

"We're seeing something this year that we haven't seen in quite some time, and that's why I feel so confident that the good times can continue," Rich Ross, head of technical analysis at Evercore, told CNBC's "Trading Nation" on Monday.

That confidence can be tied back to three sector breakouts since the beginning of the year, according to Ross' chart work.

Take tech stocks, which have rocketed higher this year and carried the Nasdaq to fresh all-time highs.

"Technology lagged in the fourth quarter of last year, but it really comes out fighting," said Ross. "It's reimposing its will in stocks like Nvidia and the [semiconductors], which are up over 6 percent year to date. They're really driving the ship here."

Tech stocks have risen every trading session so far this year, with moves of more than 1 percent on two of those days. Over the first week of the year, the Technology Select Sector SPDR ETF gained nearly 3.7 percent. That marks its best one-week performance since December 2016.

Its performance so far this year builds upon a 2017 filled with new highs. The tech sector's one-year gain of more than 32 percent was its best annual performance since December 2009.

But tech is not alone. The financials sector has also seen a solid start to the year, a rally Ross sees continuing.

"The breakout we had just a couple of days ago from this textbook bullish play tells me banks and financials continue to work their way higher," said Ross. "We like the big bank breakouts."

Bank of America, Citigroup, Wells Fargo and J.P. Morgan Chase leapt out of the gate in the first week of trading this year. Citigroup and J.P. Morgan closed out the shortened four-day trading week with gains of more than 1 percent, and Bank of America and Wells Fargo both added around 3 percent.

Energy stocks, Ross' third pick, have also seen a robust start to 2018, riding on a bullish wave in commodities that propelled crude oil to above $62 a barrel for the first time since 2015.

It's a welcome respite for the energy sector after a weak 2017. The sector was among the worst performers on the year, down 4 percent.

"If energy, financials and technology work together, you're halfway home," added Ross. "And we haven't even talked about the breakouts in industrials and health care and materials. … Very bullish."

So far this year, the S&P 500 has risen nearly 3 percent, while the Nasdaq has added just over 4 percent.


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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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