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This will be 'the next sector to drop’: Trader

What's the next sector to fall?

With biotechs and momentum names having been crushed in recent weeks, one trader sees the weakness extending to a section of the market that has stayed relatively strong: transport stocks.

"I want to look at economically sensitive sectors like the transports," Dan Nathan of RiskReversal.com said on Friday's episode of "Options Action." "When you look at the IYT, which is the iShares ETF on the transports, when it broke out of 100 in early 2013 it went up 30 percent. You would have thought it was a social media company this year."

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But while transport stocks have been buoyed by positive expectations about economic growth, Nathan doesn't actually believe that the economy is particularly strong.

"The world is convinced ... that the economy in the U.S. is improving," Nathan said. "I'm not so certain about that. I'd rather be a bit skeptical based on some of the price action that we've seen in the equity markets up here."

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Mike Khouw of Dash Financial agrees that economic optimism has made transport stocks vulnerable.

"FedEx and UPS are valued essentially based on a recovering economic growth story. These things are not overwhelmingly cheap at current levels," Khouw said. "There's probably more risk to the downside in the near term."

To make a bearish bet on transport stocks, Nathan recommends buying a put spread on the (IYT) ETF he referenced. But the key to this strategy is that economic data have to stay weak.

"This is a sector where I think, if we get mildly poor economic data, the market stays the way it is, I think this is the next sector to drop," Nathan said.

—By CNBC's Alex Rosenberg.

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