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One S&P 500 sector has taken over tech’s leadership in past month

There’s new leadership on Wall Street.

The industrials have led the markets higher over the past month, rising 14%, double the gains of the broader S&P 500. The sector has overtaken technology, which previously led on the march back toward record highs.

There are a few catalysts behind the move that should continue to drive the group higher, according to Michael Bapis, managing director of Vios Advisors at Rockefeller Capital Management.

“You’re going to start to see a rotation from the growth names, the high-flying growth names, into some more value, safe haven names and I think that’s the first reason. The second reason, even though we don’t have an infrastructure bill, you do have an administration focused on infrastructure. Everybody I think agrees that we are due for an infrastructure upgrade in America,” Bapis told CNBC’s “Trading Nation” on Wednesday.

Bapis also notes that valuations look attractive even after the group’s recent rally. He pinpoints Caterpillar, Honeywell and Waste Management as three names that could continue to benefit from the favorable environment. Those three are up by at least 8% in the past month.

It serves investors to be selective in the space, though, said Matt Maley, chief equity strategist at Miller Tabak.

“You need to be a little bit careful on some of these names because some have had huge runs. I mean, look at UPS. It’s a great company, it’s had a great run but it’s been almost a parabolic move. In fact, if you look at its relative strength chart, its RSI chart, last week it got to its most overbought level ever,” Maley said during the same “Trading Nation” segment.

Relative strength measures a stock’s overbought or oversold condition. Last week, UPS traded with an RSI above 90 – a reading over 70 typically suggests a stock is overbought.

“Honeywell, there’s one that looks more enticing to me right here. The stock made a nice higher low and a higher high in the second quarter, it has started to pull back a little bit. Now it’s rallying once again,” Maley said.

Maley adds that if it can hold above its 200-day moving average at $157.48 and then move above resistance at $163, it would give the stock more upside momentum. The stock closed Wednesday at $160.07.

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