This hot trade could soon cool off

One of the hottest trades of the year might be ready to cool off.

Consumer staples is one of the best performing sectors of 2016, behind utilities and telecommunications, up 1 percent while the broad market is down more than 4 percent.

And curiously enough, investors have been digging into one part of the group in particular: food stocks. Shares of Tyson, Campbell, McCormick, Hormel and Kraft Heinz have rallied a respective 22, 18, 10, 8 and 7 percent this year. But according to one technical analyst, Campbell Soup might be a little too hot to touch at current levels.

"We know that staples are a place to be in an environment like this, but some of them literally are off the chart," Cornerstone Macro's Carter Worth told CNBC's "Options Action" on Friday.

Worth pointed to the massive move in Campbell Soup, which hit an all-time high late last week, as reason to proceed with caution on the stock.

Read MoreHungry? Trading hot food stocks

"It's taken off and gone parabolic," he said. "Right now the stock is 20 percent above its [150-day moving average] … and in the past, whenever it's gotten to 20 percent above its moving average, it's typically run out of gas.

Campbell is currently up more than 40 percent from its 52-week low hit last March, which, for Worth has taken the stock to a key inflection point.

"The stock is struggling right at its all-time high in 1998," he said. "We think this is where it stops, as the probability of it going higher is about 1 percent," added Worth.

Wall Street analysts tend to agree that the stock could be due for a pullback. Of the 19 who cover the stock, the average price target is $59.07 with a hold rating, per FactSet. On Monday afternoon, it was trading at $62.37.

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Host Bio

  • Melissa Lee

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

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