daytrade diaries... july 14

Morning traders. And it should be a good one for most!

Market wrap: A sharp rally in beaten-up financial stocks on Wall St has lifted the gloom ahead ahead of this week's key US earnings reports.

News that an influential banking analyst was upgrading Goldman Sachs ahead of tomorrow's profit report sparked a wave of buying as investors reassessed the outlook for the US financial sector. The S&P 500 put on nearly 2.5% to close above 900, the Dow Jones index added 2.27% and the Nasdaq 2.12%. European markets also rallied strongly.

The S&P Bank Index roared 7.1% higher and there were huge gains for the likes of Bank of America (+9.34%), Citigroup (7.34%) and JP Morgan (6.77%), all due to report later this week. REITs gained 4.3% and there was relief for miners and oilers, although gains there were more restrained.

A slide in the US dollar against the euro saw gold futures spike higher. Gold was recently at $920, its first time at that level in a week. Oil futures once again bounced off their intraday lows but could not recover the $60 mark, recently trading at $59.84, a few cents ahead of this time yesterday. Base metals were mixed - in London trade, copper was up 0.82%, aluminium off 0.6%, nickel up 1.9%, zinc off 2.2% and lead looking especially fragile, down 3.45%.

Futures traders expect a big green open, but they're not too excited. With 40 minutes left to trade, the SPI was up 59 points at 3760, which would barely cancel yesterday's losses.

TRADING THEMES TODAY

FINANCIALS: There's no direct benefit for our financial sector from gains in US financial equities but the change in sentiment is too strong for our market to ignore. The big four banks will open strongly but will they go on with it? I rarely trade the banks so I'm interested to hear views. Will short-covering drive them on from the opening highs or can we expect a fade?

TIME TO RE-ENTER? Is this the turning point after the recent seven-week pullback? Too soon to say. Today's rally has raised the benchmark for this week's US earnings reports - if the reports don't match expectations, down we go. Goldman Sachs reports tonight - we should have a clearer picture tomorrow. The earnings season is notoriously volatile, so I remain cautious.

EARNINGS SEASON: Local quarterly reports start to trickle out this week. These can provide good scalping opportunities on good news and will help clarify the medium-term outlook for our miners. There's ERA and OMH today, followed by RIO, ILU, PDN and WPL later in the week. Check out Ange08's first post yesterday - "Short term trading diary monday 13th july" (thanks Ange) - for a useful calendar for the next two weeks.

Good luck to all.