Materials stocks hit a high for a second day in a row on Thursday after rallying more than 5% in September. Tech, the one-time leader of the stock market, has fallen 9% this month.
"It's a bit of a rotation out of the growth style — that has outperformed really over the past decade, but even more so over the past eight months — and into value-oriented names," John Petrides, portfolio manager at Tocqueville Asset Management, told CNBC's "Trading Nation" on Thursday.
"If the global economy starts turning the dial to improvement and … gets closer to a vaccine of Covid-19, the cyclical portion of the economy is going to start to improve off of a very low base, and that's where investors are starting to position for," said Petrides.
Cyclical stocks are those that typically benefit when the economy is in growth mode.
International Paper is one materials stock that has benefited from the materials breakout and the surge in online spending during the pandemic, according to Matt Maley, chief market strategist at Miller Tabak.
"Seventy percent of their sales come from packaging, so with everybody using e-commerce to have their packages delivered to them, it's very positive," Maley said during the same "Trading Nation" segment.
He added that the technical setup also looks positive for a breakout.
"It's broken above three key resistance levels just in the last couple weeks. It's broken above its 200-day moving average, it's broken above its June highs, and it's also broken above its trend line going back to early 2018, and it's broken each one of those lines and in a meaningful way," said Maley.
However, after rallying 10% this week, Maley is waiting for short-term downside as an opportunity rather than buying now.
"It's had such a meaningful breakout that any kind of pullback should be relatively mild and people should take advantage of that and buy on any kind of weakness. So maybe not chase it, but it should be a good one because it's really broken out, again three different levels, that should bode well for the rest of the year," said Maley.
Its shares are up 22% this quarter, outperforming the XLB, which has risen 19%.