One of Wall Street's top equity strategists, Stifel's Barry Bannister, was bearish on U.S. stocks for an extended period. Within just a few weeks, enough changed for him to become slightly more bullish. 

Meanwhile, the market has crept upward to records, which can sometimes be a prelude to more gains. The S&P 500, up 4.25% is the past month, sits at 3,078, a closing record.

Bannister, head of institutional equity strategy, introduced his 2020 price target for the S&P 500 of $3,100 and lifted his 2019 price target to $3,050 from $2,900. When his 2019 price target was $2,900, which was below where the index traded for a chunk of time, he was recommending defensive stocks and bond proxies, and specifically advised to steer clear of cyclicals.

He's now flipped.

"By mid-2020 we see the dollar down, 10-year yield up (to 2.25%), oil up ($80 per barrel), and nominal GDP recovery, all of which favors S&P 500 cyclicals, e.g., financials, energy, industrials, tech [and] materials," Bannister wrote in a Monday note.

A number of catalysts have occurred in the past several weeks. "Events were `derisking' for the S&P 500 cyclicals, with positives including Fed quasi-quantitative easing, a trade détente, as well as some Brexit movement," Bannister said.

The Federal Reserve cut the federal funds rate to a range between 1.5% and 1.75% at the end of October, and while it didn't strongly indicate it will cut again in March, many investors expect a cut at that juncture.

"More than likely, the market is pricing in another cut in March 2020," UBS's senior strategist of global wealth management, Leslie Falconio, told TheStreet. The Fed also recently bought short-term bonds from member banks to keep rates of those assets low, which helped steepen the yield curve and restore investor confidence.

Meanwhile, it seems almost -- but not certainly -- a reality that the U.S. and China will pause their trade war, with December tariffs and possibly some 2020 tariffs rolled back. 

Much of the December tariffs would be on Chinese consumer, electronic and retail goods shipped into the U.S. The pause in the trade war, more important, is expected to be a boon to business confidence, enabling corporations to ramp up investment again. Still, the market expects the Fed to remain accommodative to economic growth.

Adding to the optimism, some backward-looking trends are positive.

"GDP report confirms recession calls premature," wrote Glenmede's chief investment officer of private wealth, Jason Pride. U.S. third-quarter GDP rose 1.9%, beating expectations of 1.7%.

"These results are further evidence that the U.S. economy is not entirely insulated from the global manufacturing slowdown, though not entirely exposed either," Pride said. "But at minimum, it shows that recession fears may have been overblown."

Pride also mentioned that more than 70% of S&P 500 companies have reported Q3 earnings, and the vast majority of those earnings have beaten expectations, with the blended earnings growth rate coming in at negative 2.6%, better than analysts' predictions of negative 4.8%.

So Bannister likes U.S. banks. The 10-year treasury, currently standing at 1.78%, could rise even more from here, Bannister says, which would improve banks' net interest margins.

Bannister specifically likes JP Morgan (JPM - Get Report) , Bank of America (BAC - Get Report) and Wells Fargo (WFC - Get Report) , which trade at historically low price-to-book multiples of 1.75, 1.2 and 1.3, respectively.

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