The market is getting a makeover.
The S&P 500 telecommunications sector is morphing into an all-new communications services sector, effective at the end of September; the sector shuffle has implications for shareholders of dozens of legacy and newer U.S. media, entertainment and telecommunications stocks.
Ahead of the changes, one top Wall Street technician has a way to profit from the move.
The new sector will combine media with telecom stocks and a select number of high-growth tech stocks. Some notable names being added to the group include Facebook and Netflix. It's the first reorganized sector in the S&P 500 since real estate was removed from the financials sector and became the 11th sector in September 2016, according to Howard Silverblatt, senior index analyst at S&P Dow Jones Indices.
Within the newly minted group, Ari Wald, head of technical analysis at Oppenheimer, told CNBC's "Trading Nation" on Monday that he finds Take-Two Interactive and Discovery particularly attractive names.
The year-long breakout above $122 per share in Take-Two is encouraging to Wald, who projects the stock could rocket around 23 percent higher.
"We think it measures higher to about $150, that's taking the height of that range and projecting it from the breakout point," he said.
The video game manufacturer has gained 20 percent this year, while shares of Discovery, the media company that owns brands like Discovery Channel and Animal Planet, have surged 43 percent in the same time.
He noted that on the chart of Discovery, the key level to watch is the $30 mark. That's the first meaningful "higher high" since peaking at $46 in early 2014.
Careful stock selection will be key when considering investing in the new sector given the wide range of the components' valuations, said Gina Sanchez, CEO of Chantico Global.
Growth within the streaming industry is "really driving this sector, however it's just so richly priced. It's hard to stomach 200-plus times forward earnings," Sanchez said Monday on "Trading Nation," referring to Netflix.