daytrade diaries... november 30

Morning traders.

Market wrap: Futures traders expect Australian stocks to recover some of Friday's heavy losses at today's market open.

The SPI futures index closed 37 points higher at 4663 after Wall Street weathered the Dubai debt-default storm better than some had feared and European markets bounced. The major U.S. stock indexes opened deep in the red but recovered steadily during Friday's holiday-shortened session. The S&P 500 finished 1.72% lower, the Dow Jones lost 1.48% and the Nasdaq 1.73%.

The losses in the U.S. were far less than in Asia, where Hong Kong plunged 4.84%, South Korea 4.7%, Japan 3.22% and Shanghai 2.35% as investors fretted over the implications of the problems in Dubai for global lending. The Chicago Board Options Exchange Volatility Index (VIX) surged 21%, heralding a return to volatility on global markets.

Analysts said US banks have less exposure than their European counterparts to a potential debt default by Dubai. But that didn't save the US financial sector, which tumbled 2.7% on Friday. Other significant losses included gold/silver miners -3.82%, oilers -3.02%, REITs -2.96%, tech stocks -2.14% and insurers -2.04%.

Major European markets opened deep in negative territory but climbed all day as bargain hunters bought some of Thursday's biggest losers. Britain’s FTSE gained 0.99%, Germany’s DAX 1.27% and France’s CAC 1.15%.

The big rally in gold suffered its first test as investors fled to the supposed safety of the U.S. dollar. The spot price crashed more than 5% intraday to under $1,140 an ounce but recovered to close 1.1% lower at $1,176.70, its first loss in ten sessions. Crude oil futures hit a seven-week low under $74 but also pared losses, finishing 2.45% lower at $75.97 a barrel.

In London, base metals were hit hard early in trade but most steadied by the close. Copper rose 0.3% and aluminium 0.35% but lead lost 2.13% and nickel 3% after earlier hitting a four-month low as stockpiles continue to rise.

TRADING THEMES THIS WEEK

BOUNCE OR FADE?: Our futures say our market will bounce this morning and the opening bell should offer stag profits for those with the nads to buy on Friday. After that, I'm less confident. Our market has been unable to build on any opening gains for weeks now. Today may be different but I won't bet the ranch on it. (Quick aside: I spoke to a Canadian cousin on the weekend. He's part of a small hedge fund and said their most reliable trade for the last few months has been betting against the Australian open - if it opens high, sell; if it opens low, buy.)

US SHOPPING SEASON: This week's early trade in the U.S. will be dominated by the reaction to the start to the Christmas holiday shopping season last Friday. The month leading up to Christmas can make or break retailers. The early signs are mixed: more Americans hit stores during the weekend than last year, but they spent less. Is that enough to support current share valuations?

ECONOMIC NEWS: There's a flood of data due this morning by our modest standards: November inflation figures at 10.30 am, October new home sales at 11 am, and quarterly company operating profits and private sector credit at 11.30 am. The US begins the week quietly with regional purchasing data tonight but the data becomes more significant as the week goes on: manufacturing purchasing data and home sales tomorrow and various job figures on Wednesday, Thursday and Friday.

Good luck to all.