The stock market is starting to show signs of a “leadership rotation,” meaning that some previously overlooked sectors hold promising investment opportunities — including some notably “old economy” stocks — according to one market strategist. Larry Tentarelli, founder and chief technical strategist of Blue Chip Daily Trend Report , believes that the wider market’s trend is still bullish despite this week’s pullback, but sees a shift in market leadership from technology into sectors trading at cheaper valuations. The strategist highlighted the industrial and energy sectors, which he said should benefit from reports of a robust American economy. “I think [there] will be a bullish rotation, and some of the Magnificent Seven stocks won’t outperform like they did last year. Meanwhile, some of the cheaper sectors could perform better,” Tentarelli said. To be sure, he noted he’s still holding AI stocks — just not as much. Within industrials, Tentarelli highlighted General Electric . Earlier this week, General Electric spun off its aerospace and energy segments into separate companies, having already spun out GE Healthcare in early 2023. Construction equipment manufacturer Caterpilla r is another strong industrial name, according to Tentarelli. The stock is also already outperforming the S & P 500 this year, up nearly 29% year to date. As a group, industrials have gained 10.3% this year, or a little less than 1% above the S & P 500. After a rocky 2023, energy has established itself as one of the S & P 500’s top outperformers in 2024. The sector has gained 17.4% in 2024, second best in the S & P 500 behind only communication services stocks. Among energy stocks, Tentarelli favors refiners. Phillips 66 was one of his picks, up 29% this year and currently trading at a below-market 12 times forward earnings. Valero , another oil refiner named by Tentarelli, has rallied 41.5% in 2024 and reached a new 52-week high on Friday. “One of the nice things about both of those sectors is the valuations are very reasonable,” said Tentarelli. Banking is another group with notable names trading cheaply, said Tentarelli. His top choices are JPMorgan and TD , which sell for 12 times and eight times forward earnings, respectively. “Last year, investors really congregated in the Magnificent Seven, and the market was scared of a recession. I think investors are now seeing that there’s so many opportunities in these other sectors at very low valuations,” the strategist said.