Stocks have crossed an important threshold: Technician

After seeing the worst start to a year since 2009, stocks are starting to turn around. The S&P 500 rose more than 2 percent in the first week of March, and some investors are betting on a move back into the green by the month's end.

"From what we see on our desk, there are people investing now, looking for the S&P to go positive by the end of the first quarter," Nicholas Colas of Convergex said Friday on CNBC's "Trading Nation."

The market strategist said stocks have gone from being very oversold to modestly overbought in the recent rally. Nonetheless, Colas sees more room to run, given strength across many S&P sectors.

"This has been one of the most hated rallies I think I've seen in my career, because things looked so bad just a couple weeks ago," he said. "You've had a big rotation out of that pessimism about global growth to thinking, maybe the U.S. economy is going to be OK this year and the rest of the world isn't going to fall off the edge."

According to technician Craig Johnson of Piper Jaffray, the S&P's break above 1,950 was a move past its "pain trade threshold," and a sign that stocks will go even higher.

"If we stayed below that, it was more painful for people to be long," he said Friday on "Trading Nation." "But now that we're above 1,950, the pain trade is up and I don't think investors have enough capital to put back to work at this point in time."

Read MoreThe S&P is closing in on a critical level

Johnson said market breadth is also pointing to more gains ahead, and has a target of 2,350 for the S&P 500. On Friday, the index closed just below 2,000.

"Back in February, we reached levels in terms of market breadth that we've only seen 20 times previously," he said. Measuring market gains after those times, Johnson said stocks often saw double-digit returns over the next year. "We think the market has gotten washed out."

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