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Hidden inflation will crush this stock: Technician

This sector could feel the heat this summer?

Wall Street's biggest concern is swiftly becoming inflation. Is inflation beginning to take off, and what does that mean for stock and bonds alike?

For Carter Worth, chief market technician at Sterne Agee, the presence of inflation is clear. And for him, one ramification is that it's high time to short casual dining stocks.

He starts by making the case that inflation is real.

Gasoline prices have risen lately as crude oil has heated up, but that is only the most recent consumer good that has gotten more expensive. Worth points out that the prices of many different foodstuffs have risen substantially this year, especially chicken and cattle.

"People say there's no inflation—it's just not true," Worth said Friday on CNBC's "Options Action." "There is inflation."

And between rising food costs and soaring gas prices, some serious damage could be done to casual dining stocks, he said.

"If you have high gasoline costs, and you live hand-to-mouth, then you have less money to spend on casual dining," he told CNBC.com. "But not only is there a risk that foot traffic is under pressure, but the cost of their own inputs are on the rise. So you have what should be two very big negatives—on the demand side and on the supply side—for purveyors of foodstuff like this."

Specifically, Worth would look to short Panera, which has been a terrible performer of late, dropping 15 percent as the S&P 500 has risen 6 percent.

"The real risk here is that this stock is toying ominously with the prospects of breaking well-defined lows and coming out through the bottom," he said.

In addition, the stock just recently broke below its uptrend, which Worth takes to be a bad sign.

"If you're long Panera, you should be concerned. And if you're looking for a short, we think this is a good one," he said.

In order to make a bearish bet using options, Michael Khouw of Dash Financial recommends buying the January 145-strike put for $9.25. This trade will make money if the stock is below $135.75 at January expiration.

—By CNBC's Alex Rosenberg. Follow the show on Twitter @CNBCOptions.