How the market gets to new highs: Trader

Strong performance in internet names such as Yelp, Facebook and Groupon doesn't necessarily mean the broader market is headed higher, Dan Nathan of RiskReversal.com said Wednesday.

"To me, when you think about some of these four-letter names, or some of these names that are up fabulously, 100 percent year to date, that is obviously speaking to a risk-on environment. But it doesn't exactly speak to breadth," he said.

On CNBC's "Fast Money," Nathan noted that the market had seen some rotation and higher yields over the past couple of months.

(Read more: Stocks close near highs, S&P 500 logs 7-day rally; Apple slumps 5%)

"To me, I think we have a situation, a technical situation where the breadth is improving a little bit as the S&P is getting back to those highs," he said. "We sold off almost 5 percent from the Aug. 2 highs, and now we're up about 4 percent from the recent lows in a straight line.

"Now, what's going to be really important here is if we continue to make higher highs here. So, we're 2 percent away, and if the breadth continues, we start see more participation in some of these cyclicals and industrials like we've seen in this last stage of the rally, then we're going to see new highs."

Nathan said that the market is signaling that it can handle a 3 percent yield on the 10-year bond.

(Read more: Stocks 'vulnerable to getting whacked')

"To me, I just think if it speaks to better growth going forward, we're starting to see global growth come back, some of the data we've seen, that's the last leg of this thing. That's what breaks us out."

— By CNBC's Bruno J. Navarro. Follow him on Twitter @Bruno_J_Navarro.

Trader disclosure: On Sept. 11, 2013, the following stocks and commodities mentioned or intended to be mentioned on CNBC's "Fast Money" were owned by the "Fast Money" traders: Steve Grasso is long BA; Steve Grasso is long BAC; Steve Grasso is long BBRY; Steve Grasso is long GDX; Steve Grasso is long GOOG; Steve Grasso is long HPQ; Steve Grasso is long MHY; Steve Grasso is long LNG; Steve Grasso is long MJNA; Steve Grasso is long NVIV; Steve Grasso is long PFE; Steve Grasso is long QCOM; Steve Grasso is long S; Steve Grasso is long ASTM; Steve Grasso is long POT; Steve Grasso is long DECK; Steve Grasso is long EEM; Steve Grasso is long DHI; Karen Finerman is long AAPL; Karen Finerman is long BAC; Karen Finerman is long C; Karen Finerman is long JPM; Karen Finerman is long TGT; Karen Finerman is long GOOG; Karen Finerman is long M; Karen Finerman is long GM; Karen Finerman is long MDY PUTS; Dan Nathan is long GE; Dan Nathan is long IBM; Dan Nathan is long TSLA; Dan Nathan is long VIX; Dan Nathan is long CAT; Dan Nathan is long MSFT; Dan Nathan is long FXI; Dan Nathan is long WFM; Dan Nathan is long ZNGA; Dan Nathan is long XCO.