Why are stock markets heading higher?

That's right, stock markets are higher and higher and we can't see a top for all this euphoria.
Today, in Europe, the rumour was the possible bid of Citigroup for a big european bank: BBVA, Société Generale, BNP Paribas and Barclays Bank were the top bets for this movement.
I face stock markets as simple movement of capital: in and out. If the capital gets in the market, the markets go higher and vice-versa. It's always like that! Now that real estate is getting flat or even negative in USA, it's natural a flow of money from real estate to stock markets (that's my interpretation of record highs in Dow Jones Industrial Average).
When markets go higher, there are sectors that underperform or even slump and others that outperform indexes.
Last year and 1st half of 2006, we heard about basic resources (commodities related companies)and little later on energy sector (sectors like telecoms were completely forgotten). We accompanished hostile bid of Mittal over Arcelor, bid of Arcelor over canadian Dofasco, and runaway quotes of stocks like Rio Tinto, BHP Billiton, Thyssen Krupp.... All of these were related to higher commodity prices like crude oil, steel, copper, sugar, coffee....
Special enphasis was given to crude oil (because of the weight in inflation data) and subsequent energy stocks: Exxon, Conoco Philips (oil related) and EDF, Endesa, Iberdrola, E-On, RWE...
Now, that crude oil is getting lower (now it's below 59 usd), I think we're starting to see a rotation between sectors.
I think that it's a good idea to sell energy and basic resources stocks and buy telecom and bank stocks.
As I said in my previous posts, I would bet for Deutsche Telekom and France Telecom in telecom sector and in banks I think that BBVA (with an incredible ROE above 33%) and portuguese BCP would be an excelent stock pick.
These (telecoms and banks) due to natural rotation between sectors will be the next drivers for stock markets.

Enjoy your investments!

Kind regards,
Filipe Vasconcelos