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Stocks higher on bullish momentum

David Russell (david.russell@optionmonster.com)

Stocks are poised to open higher again today as momentum remains bullish following a bounce last week.

S&P 500 futures are up about one-tenth of a percent but is below its previous highs of the morning. The index surged more than two percent in the two preceding sessions. Japan's Nikkei is also helping sentiment, rallying 5 percent after the country's first-quarter economic-growth estimate was raised.

Europe is mixed, with Germany's DAX up almost 1 percent, but other indexes are little-changed. Shanghai dropped more than 1 percent after Chinese exports and loan-growth lagged in May.

The S&P 500 bounced sharply on Thursday and Friday after pulling back to its 50-day moving average for the second time in as many months. The index has been climbing into record territory as years of bearish sentiment shifts and institutional investors start movin money away from bonds. Transportation stocks led the gains both days.

There are few scheduled events that could serve as macro catalysts this week. The next economic headline doesn't hit until oil inventories are reported Wednesday morning. Thursday is the likely to be the busiest of the week, with initial jobless claims and retail sales on the calendar.

Performance within the market shows little correlation between groups as investors continue to find value across a wide range of industries. No one sector has dominated performance, marking a change from earlier in the year when consumer staples and health care led the S&P 500 higher.

Our researchLAB market scanner, however, shows strength in economically sensitive groups such as telecom suppliers and sellers of big-ticket items such as motor homes and jewelry. That suggests that investors anticipate further economic growth and capital spending. Semiconductors have also stood out despite weakness in the broader technology sector.

Companies associated with the stock market--retail brokerages and financial exchanges, in particular -- have outperformed in recent weeks, as well.

Currencies are modestly bullish this morning, as the safe-haven Japanese yen falls across the board. The euro is flat, while the Australian and Canadian dollars are gaining.

Commodities are more cautious following the weak Chinese numbers: Oil fell by half a percent and copper is down a full percentage point. Agricultural foodstuffs and precious metals are down slightly as well.

In company-specific news, Apple will probably be active this week during its World Wide Developer Conference in San Francisco.

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