'Fear of missing out' will drive markets: Technician

Stocks started a new week after closing out their third-straight week of gains, with the S&P 500 within 5 percent of its all-time high.

And according to one trader, the fears that gripped the market in August are now starting to subside.

"I really think the fear-driven mentality forced a lot of investors to shoot first, ask questions later," David Seaburg of Cowen & Co. said. "People derisked across the board."

Stocks have traded in volatile swings over the past couple months, amid uncertainty about the global economy, U.S. earnings growth and a sell-off in biotech, Seaburg said. Now investors are starting to reposition, which has helped stocks rise.

"We're looking at other sectors and wrapping our heads around the earnings that are coming out and probably realizing China is not going to have the impact that a lot of people feared," Seaburg said. You're seeing a totally different repositioning effect going on right now that could last a little while longer."

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And as previous concerns have faded, technician Katie Stockton of BTIG said a different fear could soon be driving the market.

"As you get into the fourth quarter, you have this fear of missing out that helps lift the market even higher than people would expect a move to," Stockton said Friday.

She said the S&P 500 has broken through significant resistance at 2,000 and she sees upside to 2,060, which would be another 1 percent gain for stocks.

"We saw follow-through on the back of that breakout, and really a whole lot of breakouts among individual stocks," she said. "You're seeing a lot of reversals here."

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Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's “Closing Bell (M-F, 3PM-5PM ET).   In addition, he contributes to CNBCand CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

Follow Michael Santoli on Twitter @michaelsantoli

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