The roaring recovery rally may have come months too soon.
That's what one ETF analyst said Monday of the comeback in cyclical stocks, Wall Street's reaction to positive announcements regarding a Covid-19 vaccine.
The resurgence is happening "very, very much too fast," Dave Nadig, chief investment officer and director of research at ETF Trends and ETF Database, told CNBC's "ETF Edge."
Cyclical plays — those tied to the welfare of the U.S. economy — have risen sharply this month. The Energy Select Sector SPDR Fund (XLE) is up about 38%, the SPDR S&P Bank ETF (KBE) has risen almost 19%, the Industrial Sector SPDR Fund (XLI) has gained nearly 18% and the iShares DJ Transports ETF (IYT) is up over 11%.
With "very little chance" that the economy will come back in full force within six months, investors should look back on the past six months for trades that could work in the near term, Nadig suggested.
He cited a survey his firm conducted of 2,200 financial advisors, many of whom said they would not be returning to the office regardless of vaccine availability and if they were to return, it would not be full time.
"I actually think the opportunity here is to look for weakness in what was working, things like the Direxion Work From Home ETF, WFH," he said. "Anytime you see a pullback there, I'd lean in."
"The companies that we've been talking about for the last six months, they're going to continue to be drivers for the next year or two here," he said.
Those include WFH, online retail ETFs and technology ETFs with strong fundamental setups, Nadig said, adding that trying to pinpoint the market's next winners was, at this point, something of a "fool's errand."
"There's really no chance for any significant stimulus, ... frankly, probably before February, and whether that stimulus is enough to do anything but maybe keep the consumer economy alive I think really remains to be seen," he said. "I don't see a lot of real rosy things on the horizon until we have that broad distribution of a vaccine, and I think that's much further out than people are really counting on."
For GraniteShares co-founder and CEO Will Rhind, it's clear that "we're not out of the woods yet."
"What this year has shown us is a complete bifurcation between the digital economy and the physical economy," he said in the same "ETF Edge" interview. "One thing that we can be assured of is that there will have to be more stimulus at the government level."
Rhind agreed with Nadig that the pandemic's winners would largely continue to work, but he took a more risk-averse approach to investing in the market.
"The upshot of all of this will be there'll be more volatility in the market, so for me, I think gold is still a good play in this particular market environment as people look for a hedge to the market volatility that we're seeing," Rhind said.
Rhind's firm runs the GraniteShares Gold Trust (BAR).