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Markets hover after Friday breakout

David Russell (david.russell@optionmonster.com)

Stocks are little-changed today after breaking out to new record levels on Friday.

S&P 500 futures are down fractionally, following similar moves in Europe. Asian markets rose overnight, led by a gain of more than 1 percent in Shanghai.

The S&P 500 closed above 1600 for the first time ever on Friday after April's non-farm payrolls report came in better than expected. The news broke a series of weak data points and confirmed that the U.S. economy continues to expand, albeit at a begrudging pace. Corporate earnings have also remained strong.

Sentiment has been turning bullish since the S&P 500 bounced off its 50-day moving average in mid-April. Aggressive sectors such as energy, technology, and materials have led the market higher over that time, while conservative picks including health care and utilities have lagged. There is also renewed strength in homebuilding and automotive names, which are crucial to the broader economy.

In addition, investors are returning to international and emerging-market stocks, another bullish sign for the overall market. optionMONSTER's propriety researchLAB screening tool shows Turkish, German, Russian, and Taiwanese funds outperforming the S&P 500 by almost 2 to 1 in the last week.

Aside from the ongoing flow of corporate earnings, there are few scheduled events that could serve as catalysts this week. Thursday looms as perhaps the most important day, featuring same-store sales for April and weekly jobless claims.

Commodities and currencies are painting a mixed picture this morning. Oil is up slightly while recious metals are gaining almost 1 percent, but copper and most agricultural products are lower. The euro and Australian dollar are down as well, which is somewhat bearish. But the Japanese yen is falling--a potentially bullish harbinger.

In company-specific news, BMC Software will probably be active after Reuters reported that private-equity firms are close to buying the company for $46 a share. JP Morgan could also be in focus amid reports that some big investors want CEO Jamie Dimon to relinquish chairmanship of the bank.

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