The England captain cut a frustrated figure after defeat at Watford.
Asked if Rooney should be dropped, Sinclair said on Match of the Day 2: "No. Even on current form I do feel he is good enough to be in that team. But it's the position that he's playing in.
"For me he's a No 4 or a holding midfielder now. I don't think he's got the mobility to get around, he's not got the pace he once had.
"I feel if you play him alongside Michael Carrick, which would warrant (Paul) Pogba to get forward with a lot more creativity and freedom, I think that's how you could play him in the team."