Strange pattern may suggest late-Friday surge for the market

The S&P 500 slipped slightly on Friday morning, in the index's second down day following a huge gain on Wednesday — but an interesting trading pattern may predict a late-day rally.

The S&P was also lower as of midday trading on both of the prior two Fridays. But in both sessions, the bulls fought a valiant fight into the close, leading the market to rise powerfully in the last hour of trade. As a result, the S&P closed at the dead highs on both Feb. 17 and Feb. 24.

What explains the striking moves? Perhaps it comes down to fund managers' anxiety about relative performance.

"I think this is what they're calling, nowadays, 'FOMO' — fear of missing out," Mark Tepper of Strategic Wealth Partners said Thursday on CNBC's "Trading Nation."

"Most investors, advisors, managers want to be in the market, and they're using every opportunity at a pullback to invest more and more into this market," Tepper said.

Dennis Davitt, a portfolio manager with Harvest Volatility Management, says that the market's momentum has forced the hands of many investors who would have preferred to sit on the sidelines.

"It feels like the market is underweight stock," Davitt said on "Trading Nation." Yet since old levels of resistance have become levels at which "there's a tremendous amount of support, if the market does sell off, people need to buy stocks going into the end of the day."

Matt Maley, equity strategist at Miller Tabak, put it in even starker terms.

"People who think the world's coming to an end are still getting more long because they have no choice," Maley told CNBC in a Friday phone interview. "Everybody's scared to death about their performance."

Still, he points out that last week's end-of-week rally came just a few days before the end of the month. The rise, then, may have reflected short-term performance fears related to lagging further behind if investors became yet more optimistic over the weekend.

For that reason, "I don't think we'll necessarily get that [late-day rally] today," Maley said.

Of course, only time will tell.


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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.

Sara Eisen

Sara Eisen joined CNBC in December 2013 as a correspondent, focusing on the global consumer. She is co-anchor of the 10AM ET hour of CNBC's "Squawk on the Street" (M-F, 9AM-11AM ET), broadcast from Post 9 at the New York Stock Exchange.

In March 2018, Eisen was named co-anchor of CNBC's "Power Lunch" (M-F, 1PM-3PM ET), which broadcasts from CNBC Global Headquarters in Englewood Cliffs, N.J.

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