Top technician says rail and defense stocks are set to take off, despite trade war tensions

Boeing, Lockheed Martin and CSX Transportation are the stocks to buy within the industrial sector, Todd Gordon of TradingAnalysis.com told CNBC on Tuesday.

“I follow the trend lines. So far this market just looks like it wants to push higher,” Gordon said on CNBC’s “Fast Money.”

Industrial-sector stocks have fallen in the crosshairs of PresidentDonald Trump’s trade war with China, but defense and rail stocks seem to be pushing higher.

“Those [industrial] conglomerates have been very, very weak. GE and 3M have been underperforming. If you take those out, industrials, I think, would be a lot stronger,” Gordon said.

He referenced the XLI, the Industrial Select Sector SPDR Fund, which measures the trend of industrial stocks. It has been gradually rising since about 2011.

“We are in a beautiful parallel channel here, no reason to fight the trend at this point,” he said. “We have more upside to go.”

Boeing, Gordon said, will break free of its recent stagnation to continue the upward trajectory it established in early 2017. Lockheed Martin is “not as strong as Raytheon and Boeing,” but Gordon said he sees the defense company hitting $360 per share.

CSX, a railroad in the eastern U.S. and Canada, also has a “long-term parallel up-channel,” much like the XLI.

“You might have another $10, $20 in CSX,” Gordon said. “You focus in on the rails and the defense within the industrials.”

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