As I wrote in my piece on Monday, I suspected that technicals and Federal Reserve testimony might line up for an upside move. However, banks are still lagging.

The upside: We've restored some of the technical damage done to the NAZ. The Dow and the S&P are still fighting heavy action because of the banks. Frankly, I can’t find a single word in yesterday's commentary that doesn’t support a continuation of these massive net-interest margins. Current bank earnings are just far too pessimistic. However, once reports start coming through, this pervasive negativity should result in a stunning move higher.

While I sold all my new trading longs on Monday, I added to existing positions over the last couple of days. Notably, JPMorgan (JPM), Visa (V), and Ultra Long QQQQ (QLD). I also added PNC Bank (PNC) back into this morning’s weakness.

I would willingly add more bank exposure as well, and think my next names will be Bank of New York Mellon (BK), and M&T Bank (MTB), or both. I also like State Street (STT) and Northern Trust (NTRS), but feel these stocks are already selling close to fair value. That doesn’t mean they won't rise materially, but I feel they need to “earn it” much more than the others listed above -- and the ultimate upside is therefore likely to be lower.

As for durable goods, the Fed report followed profoundly strong reports on the leading indicators and the Philly Fed reading. I continue to see evidence from multiple (if non-traditional) sources that supports my extremely variant view of stronger-than-consensus economic growth for the second and third quarters. (Could we see a positive print?)

By the time the fourth quarter rolls around, the prevailing economic winds may be strong enough for economists to revise numbers sufficiently higher, such that there would then be no chance of an upside surprise.