Market Insider

Traders fear Fed uncertainty more than Friday 13th

Traders on the floor of the New York Stock Exchange.
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While Friday the 13th can often be lucky for stocks, traders are watching to see if dip buyers will step in to provide some support for the market after three days of selling.

The market has been squishy, with bond yields rising and gold sinking amid speculation the Federal Reserve could move to cut back its bond-buying program, as early as next week's policy meeting. While still not a consensus view, the idea that better economic data could spur the Fed sooner rather than later has gained momentum.

(Read more: Will Friday the 13th bring bad luck to the market?)

The S&P 500 lost 1.8 percent in the past three sessions, and closed Thursday at 1775, off six points. As for Friday the 13th, S&P/Capital IQ's Howard Silverblatt says the S&P 500 has gone higher 56.6 percent of the time on the supposedly jinxed date, but when it falls in December, the index has been higher two thirds of the time.

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Scott Redler of follows the market's short-term technicals and he's eyeing support for the S&P 500 between 1760 and 1770.

"In the last week and a half, we've seen a pretty controlled pullback on the heels of the taper talk and ahead of the Fed meeting next week," he said. "If 1760/1770 were to hold next week, there's still a chance to rally into year end."

Bank of America Merrill Lynch's MacNeil Curry saw a near-term positive for stocks in the S&P 500's action on Thursday: The futures and index held the 1774/1773 area, the high reached in October. "It's now flipped to support," said Curry, global head of technical strategy.

(Read more: Japan extends lucky streak on unlucky day)

There was an interesting divergence Thursday in the performance of the Russell 2000, which closed slightly positive – up 1 point at 1103, while the S&P, and all finished lower. The Russell was also the hardest hit and is down 2.5 percent for the week.

Paul LaRosa, chief market technician at Maxim Group, said the Russell may be a signal that stocks could reverse, but he said it's too soon to tell. The Dow's close below the key level of 15,791, and the S&P 500's close below 1779 signal more selling pressure.

"For the Nasdaq, that number would be 3998, and it has been hanging in above that level," he said, while support for the Russell 2000 is 1096. "The small caps are holding on for now. What could happen is if they don't close below it, like the large cap indices did, that could lead to a positive divergence and that leads to a bounce…If you see all the indices start to bounce, most likely that was a positive divergence." If the selling continues, LaRosa said he expects the S&P 500 to dip down to the 1750 level.

(Read more: Stocks end lower after 8-week run higher; Dow's worst day since Nov. 7)

While analysts note seasonality usually helps stocks in December, the outcome of next week's Fed meeting is a wild card and could result in more choppiness.

According to the "Stock Trader's Alamanac," the triple witching expiration of futures and options is also lucky for stocks during December. In 22 of the past 28 triple witching expirations, stocks were higher for the week. The Monday before that Friday expiration has been up eight of the last 12 years.

—By CNBC's Patti Domm. Follow here on Twitter @pattidomm.