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Banks and old-school techs come roaring back

Traders on the floor of the New York Stock Exchange.
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Traders on the floor of the New York Stock Exchange.

Financials and old-school techs are back in favor this week. The higher rates we have seen could be a help to banks:

This week
BofA 6%
JPMorgan 5%
Morgan Stanley 5%
Wells Fargo 3%

But watching old school techs move up this week has been interesting:

This week

SanDisk 10%
Applied Materials 7%
Microsoft 7%
Seagate Technology 5%

I noted yesterday that old school tech was more "growthy," so they get a higher multiple in a rising rate environment, which is usually equated with growth.

(Read more: 'Old school' tech stocks rally: What's up?)

It has also been a huge weak for the semis...the Semiconductor Index up 4.5 percent and has broke to its highest level since 2002.

Despite all that, I don't see leading groups doing any huge selling to finance the buying. I don't see biotechs collapsing. Some weakness in new tech favorites this week like Workday, Fireye, and Tableau, but not dramatic.

Elsewhere:

1) Another big IPO day...five IPOs, with one (Globoforce Group) withdrawn.

On the NYSE:

a) A10 Networks (ATEN), which makes software that optimize data center performance, priced 12.5 million shares at $15, high end of the $13 to $15 range.

b) Cloud-based global trade management software provided Amber Road (AMBR) priced 7.3 million shares—more than expected—at $13, above price talk of $10.50 to $12.50.

c) TPG Specialty Lending (TSLX), private equity firm TPG Capital's business development company, priced seven million shares at $16, at the low end of the$16 to $17 range.

(Read more: Fed's Kocherlakota blasts new rate guidance, wants low ratesfor longer)

On the NASDAQ:

a) Orphan disease biotech Versartis (VSAR) priced six million shares at $21, at the high end of upwardly revised range $19 to $21.

b) Borderfree (BRDR), which helps U.S. retailers set up international e-commerce, priced five million shares at $16, high end of the $14 to $16 range.

(Read more: Borderfree prices IPO at top end of range)

2) Quadruple witching: not what it used to be. It's quadruple witching day, the quarterly expiration of stock index futures and options, and single stock futures and options. Volume will be much higher than normal.

(Read more: 29 out of 30 banks pass Fed's stress test)

Unfortunately, quadruple witching is not what it used to be. Volumes this week have been on the light side. This would not have been the case even five years ago, when volume was almost invariably higher in the days leading up to quadruple witching as traders closed out their positions and opened new ones.

What happened? The options business exploded. There are a lot more options contracts available, with many different expirations. You can trade weekly options on some individual stocks. You can trade contracts that have a monthly expiration. All this has diminished the impact of the quadruple witching expiration.

However, there continues to be a quarterly rebalancing in the S&P 500, where companies that have reduced their shares outstanding (usually through buybacks) have their weightings reduced, and companies that have increased their shares outstanding (secondaries, etc.) have their weightings increased.

(Read more: Airbnb in advanced financing talks: Report)

Here's the companies that are having the biggest reductions in their weightings, along with the percent that is being reduced:

IBM -4.1%
Cisco -3.6%
Express Scripts -3.7%
Illinois Tool Works -4.3%
Apple -0.9%

Here are the companies with the biggest additions:

Facebook 3.9%
Google 0.6%
Source: S&P

On aggregate, companies are purchasing fewer shares than they did a year ago--the prices are much higher than a year ago, after all, but share counts on the whole are still declining.

3) Goldman weighs in on high frequency trading. Gary Cohn, president and COO of Goldman Sachs, posted an editorial in The Wall Street Journal today.

(Read more: Fitch Ratings takes US off negative ratings watch)

Most of his suggestions are sensible: a "kill switch" that would immediately halt a firm's algorithmic trading if the program goes awry; a fee on excessive message traffic for companies that post enormous amounts of bids and offers that are never executed; and dissemination of public market data to all market participants simultaneously. All of these merit consideration, but Mr. Cohn didn't go into more delicate territory: A discussion of maker/taker and payment for order flow, or what—if anything—should be done about the slow and steady growth of dark pools, a business Goldman is already in.

By CNBC's Bob Pisani. Follow him on Twitter @BobPisani

  • A CNBC reporter since 1990, Bob Pisani covers Wall Street from the floor of the New York Stock Exchange.

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