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This surprising stock could hold the key to the Dow

There's a new stock holding the most sway in the Dow Jones industrial average. It isn't newly inducted Apple. It's Goldman Sachs, and that could mean very good news for the index if one well-followed technician is correct.

Even though Apple's $740 billion market cap is nearly nine times that of Goldman's, its impact to the Dow is actually less than Goldman's. That's because unlike the S&P 500, which is weighted by market cap, the Dow is a price-weighted index and as such, affords more importance to stocks with a dollar amount.

In fact, Goldman's influence on the Dow is greater than that of Coca-Cola, Pfizer, AT&T, Intel and Cisco—the five least-weighted components—combined.

As March 20, 2014
Goldman Sachs $193.13 Coca-Cola $40.65
Pfizer $34.25
AT&T $33.23
Intel $31.31
Cisco $28.44
$193.13 TOTAL $167.88

The next weightiest members are now 3M and IBM. Visa, which recently had a 4-for-1 split, has now dropped from the top slot all the way down to 21st.

For the Dow, having Goldman as the biggest holding could mean some very positive returns if the chart work of Carter Worth, technical analyst at Cornerstone Macro, is correct.

"We are toying with the prospects of a breakout," said Worth, looking at a five-year chart of Goldman. He sees the stock as testing the upper end of a consolidation wedge pattern.

On a one-year chart of the stock, Worth sees Goldman shares as testing the neckline of a bullish reverse "head and shoulders" pattern. That neckline corresponds to the upper end of the wedge pattern in the longer-term chart at just under $200 per share. The stock traded around $193 on Monday.

"The presumption is a breakout. We're looking for a move to about $210," said Worth. "Goldman has lagged the group—financials—and the market. We like it a lot."

If all the other stocks in the Dow remain the same price, the Dow could move 113 points higher if Goldman reached Worth's $210 price target.

For those wanting to play Goldman to the upside, CNBC contributor Mike Khouw recommends buying July 195-strike calls.

"There is a lot of potential if volatility and rising rates kick in," Khouw said, noting that the stock has swung around in a range between $175 and $195 since October 2014. "It moves around a little bit but you can still go out and buy the July 195 calls for just $7 which is a relatively small amount. You're talking about 3.5 percent of the current stock price for something that has moved significantly more than that in much shorter periods of time."

For Khouw's trade to make money, Goldman shares would have to trade above $202 in the next four months. That would be roughly $5 above its 52-week highs, a level not seen since 2007, just before the financial crisis.

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    Melissa Lee is the host of CNBC's “Fast Money” and “Options Action.”

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