daytrade diaries... january 18

Morning traders.

Market wrap: The Australian stock market is expected to open in the red this morning after Wall Street suffered its worst session of the new year on Friday.

The March SPI futures contract closed 29 points lower at 4842 as Wall Street finished lower for the second week in three. Weak revenue from JP Morgan, the first of the big financial stocks to report Q4 earnings, helped the Dow slide 101 points or 0.94% to 10,610. The S&P 500 fell 1.08%, its heaviest loss since December 17, and the Nasdaq fell 1.24%.

JP Morgan quadrupled its fourth-quarter earnings, beating forecasts, but its revenue missed estimates and losses in some of its businesses and a cautious outlook sparked a sell-off across the financial sector. Intel was also sold down hard despite beating expectations on Thursday.

"To have two marquee-name companies like JP Morgan and Intel put out their earnings and have the market react like this is a very bad sign," a U.S. strategist told MarketWatch. "The flow of institutional money into the market has really dried up; no one wants to be buying at these levels."

The night's economic data was mixed. Consumer sentiment came in worse than expected, but regional manufacturing figures were strong. Data on consumer prices and industrial production fell in line with economists' forecasts.

The S&P Bank Index dipped 2.67%. Also hit hard were: airlines -2.81%, precious metals miners -2.05% and tech stocks -1.43%.

Gold, oil and most base metals weakened as the U.S. dollar index recovered some of the ground it lost over the holiday season. The spot gold price slipped $11.50 or 1% to $1,130 an ounce after tame U.S. inflation data reduced its appeal as a hedge.

Crude oil futures fell 1.75% to $78 a barrel, down nearly 6% for the week as the so-called "winter premium" in the U.S. continued to unwind on the prospect of warmer weather.

Base metals were mixed as the rising greenback and inventory concerns continued to weigh. In London, copper fell 1.3%, lead 3%, tin 2.2% and zinc 2.1%, while aluminium added 0.26% and nickel 1.4%.

The major European markets closed lower. Britain's FTSE lost 0.78%, Germany's DAX 1.89% and France's CAC 1.53%.

TRADING THEMES THIS WEEK

FINANCIALS: Friday's late-late CBA profit upgrade shows where the strength is likely to be in our market this week. We can expect further buying in the big four banks this morning and that should limit the downside from Friday's overseas falls. With commodity prices under pressure, we may see a two-speed market early this week, with financials strong and resources comparatively weak.

U.S. EARNINGS: The early evidence suggests that companies reporting Q4 earnings this month will struggle to meet lofty expectations. That's an ominous sign for global markets. U.S. markets are closed tonight for the Martin Luther King Jr public holiday but there's a heavy diet of earnings reports this week: Citigroup on Tuesday, followed by Goldman Sachs, Morgan Stanley, IBM and Google before the week finishes with General Electric and McDonalds on Friday.

ECONOMIC NEWS: A slow start to the week with the US closed tonight for a public holiday. Locally, there's the delayed release of the Melbourne Institute's inflation gauge at 10.30 am today. The local calendar remains light this week but the U.S. has the usual slew of data later in the week.

Good luck to all.