As financials flail, one banking stock could be about to break out

Financials are in a funk.

The sector has tumbled 9 percent over the past year, by far the worst-performing S&P 500 sector over that stretch.

But there is one name in the group that is setting up for a breakout, said Todd Gordon, founder of TradingAnalysis.com.

"One financial that I do like is Bank of America," Gordon said Wednesday on CNBC's "Trading Nation." "Obviously you have a very nice uptrend here, you've broken resistance, we've come back to test support."

"There is a nice kind of level right here at about the $30 region," Gordon said. "There's a lot of open interest here. If we can sometimes get a push – and help from the broader market would certainly help – there's sure to be a lot of stop-loss buying going off in Bank of America. I will add to my holding in Bank despite the financials weakness in the S&P so this is one strong name that I do like."

Bank of America needs to rally around 5 percent to push through $30. The stock has not traded above that level since October.

The sector is a long-term buy even if it continues to underperform in the short term, said Michael Bapis, managing director of Vios Advisors at Rockefeller Capital Management.

"Banks are stronger than ever from a balance sheet standpoint, from a risk standpoint, they're taking less risk than they ever have, and from a cash standpoint. Then you throw in earnings, positive earnings and low PEs for many of the banks," Bapis said Wednesday on "Trading Nation."

The XLF financial ETF trades at below 12 times forward earnings, while the S&P 500 trades at a 16.5 times multiple.

"This is just a forgotten sector that people have put aside and it is going to snap back at some point in the future," said Bapis. "I'm positive on the space long term. I'm very surprised that it has taken this long but if we're taking a long-term perspective for our clients, I'm fine waiting 18 months for it to bounce back."

The XLF ETF has risen 10 percent this year, below the S&P 500's 13 percent advance.

Disclosure: Todd Gordon owns shares of Bank of America.

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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 CNBC and 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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