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Futures higher after record breakout

By: optionMONSTER
Posted: 11/14/2013 8:09:00 AM
Referenced Stocks: SPX

Stocks are inching higher today after breaking out into record territory yesterday.

S&P 500 futures are up about 0.1 percent, while most European indexes are up by more than 0.5 percent. Asia was strong in the overnight session, led by a 2 percent gain in Tokyo. The Nasdaq is indicated lower on weak results from tech giant Cisco last night.

The S&P 500 rose 0.8 percent to 1782 yesterday, escaping from a range that had held it in check for more than three weeks. The market has been rallying all year as huge amounts of cash locked up in bonds migrate into equities. Low inflation and an improving global economy have also bolstered sentiment.

Attention today will likely focus on Janet Yellen's appearance before the Senate banking committee at 10 a.m. ET as investors look for clues on when the Federal Reserve will slow monetary stimulus. Initial jobless claims also come out at 8:30 a.m. ET.

Japan reported better-than-expected economic growth in the third quarter, while Europe's matched expectations. The Japanese yen is down across the board, which usually corresponds with increased confidence. The U.S. dollar has been advancing against the currency since early October, which could make some chart watchers expect further yen weakening--another potentially bullish catalyst for stocks.

Even during the recent period of consolidation, our researchLAB market scanner showed strength in stocks that benefit from an improving economy: retail, industrials, and transports. Within the financial sector, money has also been flowing into mutual-fund operators and retail brokerages, which stand to benefit from a continued bull market. Heavyweights such as Bank of America, JP Morgan, and Citigroup also appear to be rousing after several months of consolidation.

West Texas Intermediate crude oil is down slightly while Brent crude is climbing more than half a percent, a combination of prices that's potentially bullish for refinery stocks. Gold and silver are both trying to rebound, while copper is down fractionally. Agricultural products are mixed.

Aside from the weak yen, greenback strength is the main theme in foreign-exchange markets, as the greenback climbs against its European, Canadian and Australian counterparts.

CSCO is the big mover in company-specific news, dropping more than 10 percent after revenue and guidance missed expectations.

Disclosure: I own BAC calls.