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UPS could see its worst December on record. Buy these two transport stocks instead, says strategist

Transports are getting wrecked.

After posting its worst week since August 2011, the fell again on Monday. The index is now down nearly 9 percent just this month, but one top strategist said the move lower isn't flashing a sell signal for the broader market just yet.

The Dow Jones Transportation Average is widely followed because its components are considered the backbone of the economy. If these stocks — primarily airlines, shipping and trucking names — are performing well, then the consumer and the broader economy must be in good shape. Market technicians also watch the transports closely since it's part of the so-called Dow Theory, which in simplest terms means that any buy or sell signal must be confirmed by tandem movement for both the Dow industrials and the Dow transports.

Both averages are now in correction territory — down more than 10 percent from their 52-week highs — but Ari Wald, head of technical analysis at Oppenheimer, said this isn't a sell signal just yet.

"To get a sell signal you need both the industrials and the transports to break below their Q1 lows," he said on Monday's "Trading Nation." "The transports have broken down below that Q1 level, but you don't get a sell signal as long as the Dow industrials are above 23,533. So not yet a bear market by Dow Theory definition."

That said, he believes some of the components in the index are sells at current levels — especially . The shipping giant is on pace for its worst December on record, and Wald believes the pain is set to continue.

"Stay away from UPS. It broke a seven-year uptrend today," he noted, also pointing out that even while in the uptrend it was an underperformer relative to the rise in the broader market. "[UPS] is breaking down, and it's leading the market lower ... overall poor risk/reward, sell UPS," he said.

Competitor FedEx was also in the red during Monday's session, falling to a 19-month low after Bank of America cut the stock to neutral on management shake-up concerns.

Like Wald, S&P Investment Advisory Services Equity Chief Investment Officer Erin Gibbs believes investors should stay away from shipping companies since they're facing margin compression. But she does believe there's value to be found in the broader transportation space. She likes the airlines, and is specifically watching and .

"When you look at the growth rates for next year, airlines have an expected earnings growth rate of about 20 percent, which is double the overall transport expectations," she said.

In the past three months shares of Delta have fallen more than 2 percent, while shares of Alaska Air are down nearly 7 percent. By comparison, the transportation index is down more than 14 percent.

"Airlines are still doing well. There's still global growth, and that's one area we do find safe," she added.

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