There are signs investors are beginning to favor value stocks, typically a defensive play, over riskier growth stocks, according to Gina Sanchez, CEO of Chantico Global.
"We've actually been observing that rotation since May," Sanchez told CNBC's "Trading Nation " on Monday.
The S&P 500 value ETF has ground higher over the summer, gaining nearly 5 percent since the beginning of May.
"One of the reasons for that is that to some degree we were calling for the peak of the economy for the U.S. to be sometime in early 2019 but we think that the tax stimulus actually moved that peak early," said Sanchez. "If you look at earnings within the S&P 500, they're trailing at 25 percent-plus growth. That's not sustainable."
S&P 500 earnings this quarter are up nearly 24 percent from a year earlier, better than the 20 percent growth rate initially expected, according to FactSet.
"The market is saying we're probably going to go into a normal second phase of the cycle," Sanchez said. "We're likely going to slow and as that happens investors are going to get more defensive and they're going to look for better value for the money that they invest."
Value stocks, which favor cheap valuations relative to peers, generally outperform in a slowing economy. The names are typically defensive against weaker economic growth. Growth stocks overlook higher premiums in favor of an expected boom in earnings and sales growth.
Chris Verrone, head of technical analysis at Strategas Research Partners, sees a market rotation benefiting two value stocks in particular.
"The first is Disney which has really been dead money for the better part of the last four or five years, " Verrone said Monday on "Trading Nation." "What we've seen most recently is getting up through that very important $110 area. That's about a four- or five-year breakout. We think this gives you a target closer to $140."
A move to $140 represents a more than 20 percent rally in Disney shares.
"Amgen, very similar story, " said Verrone. "Since peaking in 2014/2015 the stock has essentially been sideways. We think it's coming up and out of this base."
Disney and Amgen have both had a strong start to the second half of the year. Since the beginning of July, Disney is up nearly 11 percent, while Amgen has gained 7 percent.