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Top technician: This sector is about to fall 10%

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This could be a problem for the rally

The industrial stocks haven't looked too industrious this year. With a mere 1 percent rise in 2014, the sector is lagging the by more than 5 percentage points. And according to Carter Worth, chief market technician at Sterne Agee, it's about to get much worse.

"It's not good," Worth said Friday on CNBC's "Options Action. " We're looking for a 10 percent decline for industrials."

After a long period of outperformance, the industrial sector has started to fall behind the S&P 500. And going forward, Worth believes that weakness will beget further weakness.

To furnish his point, the technician unveiled charts of some large industrial stocks, such as General Electric, Boeing and Pentair, pointing out that all recently broke their uptrends.

The most dramatic example of a break in trend, however, came for Precision Castparts, which fell steeply last week after missing earnings estimates.


Now, Worth is looking out for the industrials as a whole to drop. He points out that even as it has underperformed, the sector, as represented by the SPDR Industrial Sector ETF (XLI), has continued to enjoy a wonderful uptrend.

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"The presumption is this entire sector is finally going to break this remarkably orderly uptrend that it's been in for about three years," he said. "We're on the line, we think it gives way."

And he added, "we think the 'tell' is the current divergence with the market. This should continue."

On Monday, Worth's call is already looking good, as the industrials underperform every other sector with a 1 percent drop.

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—By CNBC's Alex Rosenberg.

Follow the show on Twitter: @CNBCOptions.