This winning sector is still your best bet: Chartist

The S&P 500 utilities sector has tripled the broad market's 3.8 percent gain this year, making it 2014's best performing sector by far. And according to Sterne Agee chief market technician Carter Worth, utilities continue to be the best part of the market to invest in right now.

The utilities are "still an excellent area for achieving outperformance, by our work," Worth wrote in a Monday note. "The presumption is the utilities sector is toying with the prospects of a breakout-type move to all-time highs. We remain buyers."

Worth's analysis starts with a short-term view. Showing a five-year chart of the SPDR exchange-traded fund that tracks the sector (which trades under the ticker symbol XLU), Worth points out the importance of the upward channel.

"We know that securities respond to trendlines, and that's just how it works," Worth said on Friday's "Options Action." "And we are likely to approach and even just get back to and exceed a little bit the top of the channel. It implies, for the( XLU), a move to around 46, which would be roughly 10 percent from here."

Taking the longer view, Worth points out that the utilities sector is currently approaching a key level.

"Look at where we are. The action right here, strength right here right now, implies a breakout above the 2000 top, the 2007 top, just a textbook conventional buy juncture," Worth said on Friday.

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This technical take is also buffeted by the broader market environment. The XLU, which pays a fat 3.5 percent dividend yield, has surely been the beneficiary of falling interest rates, as investors look for yield outside of the fixed-income world.

But judging by the current ratio of 10-year Treasurys (represented by the flat line below) to the dividend yield provided by the utilities sector, Worth says this trend could still have legs.

Currently the ratio of the utilities sector yield to the 10-year note yield is about 1.5-to-1, well above the median ratio over the past 20 years of 0.82-to-1. That would seem to suggest that utilities still provide a good value.

Read MoreHow long can Treasury yields stay this low?

"You're getting a lot of yield relative to what history says you should get out of utilities," Worth said. "This is a good place to be."

To trade Carter's bullish call on the utilities ETF, Mike Khouw of Dash Financial recommends buying the (XLU) December 43-strike call for $1. This trade makes money if the ETF is above $44 (the strike price plus the cost of the call) at December expiration.

—By CNBC's Alex Rosenberg

Follow the show on Twitter: @CNBCOptions.

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