daytrade diaries... november 4

Morning traders.

Market wrap: Local investors will look to surging gold and oil prices to support our market after a soft night for overseas equities.

Yesterday's weak session in Asia flowed through Europe and onto Wall Street overnight, but U.S. losses were limited by M&A activity. A bold bet on the U.S. economy by Warren Buffett in the form of a takeover of a major railroad operator helped pare losses after early jitters caused by analyst downgrades for tech stocks and weakness in financial stocks. The Dow Jones closed 0.18% lower but there were gains for the S&P 500, up 0.24% and the Nasdaq, up 0.4%.

Buffett's Berkshire Hathaway will acquire the 77.4% of railroad operator Burlington Northern Santa Fe it doesn't own for US$26 billion. "It's an all-in wager on the economic future of the United States," Buffett said in a statement. "I love these bets."

There were big gains in the US for gold/silver miners, up 6.39% as the price of gold hit a record high. Also advancing strongly were biotechs +3.46%, natural gas companies +1.55% and oilers +1.34%. The financial sector was held back by Swiss banking giant UBS's $500 million+ loss in the third quarter.

European markets were lower on worries over the outlook for financial stocks. Britain's FTSE slipped 1.32%, Germany's DAX lost 1.43% and France's CAC 1.52%.

News that India's central bank will buy 200 metric tons of bullion sent gold futures racing to a record high. The spot gold price was recently trading at $1085.40, up more than 2.5%.

Crude oil futures caught a lift from strong factory orders in the US, rising 1.8% to trade recently at $79.38. Base metals were generally softer but little changed in cautious trade ahead of tonight's Federal Reserve outlook statement. In London, aluminium slipped 0.16%, copper 0.24%, lead 0.37% and nickel 0.78%, while tin rose 0.34% and zinc 0.18%.

Futures traders expect our market to open marginally higher. The SPI futures index closed 12 points up at 4530.

TRADING THEMES TODAY

GOLD: Today's record high may not translate into much in Aussie dollars but you can never discount the power of sentiment in trading. A record high is a record high and it will attract buyers. Shareholders in the sector should do well today.

PATIENCE: Aside from gold and oil, there is little in last night's overseas action to encourage big bets today. The market is most likely in a holding pattern until tonight's US interest rate announcement. Snapshot trading for me until the market gives a clear sign that it is ready to resume the uptrend.

ECONOMIC NEWS: Monthly retail sales and building approvals are due at 11.30 am. The big action tonight is the US Federal Reserve's outlook statement and interest rate announcement. No change expected but there is keen interest in this month's statement. Also due tonight: employment figures, job cuts, mortgage applications and non-manufacturing business conditions.

Good luck to all.