Banking stocks are breaking out this month, but Miller Tabak's Matt Maley says one or two things need to happen for him to turn from cautious to bullish.
"This year [the KBE bank ETF has] been stuck in a relatively wide range and it's getting up towards the top end of that range," the strategist said on CNBC's "Trading Nation" on Thursday. "If it can break out of the top of that range, it's going to be very bullish for the entire group."
Maley is also looking for signs in the bond market for a bigger banking breakout.
"If the yield on the 10-year note can break above its summer highs or its highs of just a few weeks ago of 1.9%, that's going to be very, very bullish. The [algorithms] are going to kick in. The group is going to skyrocket," said Maley.
Nancy Tengler, chief investment strategist at Tengler Wealth Management, emphasizes stock picking when sifting through the banking stocks.
"It matters what you own in the bank sector. So, for financials we're market weight but most of our weighting is outside of traditional banking," Tengler said during the same segment. "We own U.S. Bankcorp and J.P. Morgan, which we've been forced to trim due to valuation You know, it's doubled the market over the last five years."
J.P. Morgan has also outperformed this month. The stock is up 7% in September, ahead of the KBE ETF's 6% gain.
Disclosure: Tengler Wealth Management has positions in USB, JPM, GS, and MS.