daytrade diaries... october 19

Morning traders.

Market wrap: The local market looks set for a soft start to the week after disappointing earnings and mixed economic signals dragged Wall Street lower on Friday.

Futures traders have priced in a 14-point fall at today's open. The SPI futures index closed at 4836 after pullbacks on U.S. and European equity markets.

The U.S. third-quarter reporting season has so far topped expectations, but poorly received reports from bellwether stocks IBM, Bank of America and General Electric sucked some of the optimism out of the market on Friday. The S&P 500 retreated 0.81%, the Dow 0.67% and the Nasdaq 0.76%.

More than half the Dow's loss came from IBM, which slid 5% after admitting businesses are still reluctant to spend. Bank of America lost 4.6% after posting its first quarterly loss of the year on heavy loan losses.

"When you're in a market that has had a nearly 60% upward move, everything has to go right," said a major investor quoted on MarketWatch. "GE was especially disappointing on its sales as its results still reflect global economic conditions to a large degree."

European markets erased much of the week's gains. Germany's DAX lost 1.5%, France's CAC 1.45% and Britain's FTSE 0.63%.

The long-awaited breakout in oil continued, with a surge to a one-year high. Crude oil futures rose a further 1.22% to $78.67 on Friday after data showed third-quarter U.S. industrial production increased at the fastest pace in four years. Production increased at an annual rate of 5.2% in the third quarter, the first quarterly increase since the recession began in late 2007.

Gold futures caught a small bounce from a drop in U.S. consumer confidence. The spot gold price gained $2 to $1052.80 as investors rotated into gold after the Reuters/University of Michigan consumer confidence index dropped sharply last month.

Base metals mostly drifted lower in lacklustre trade. Copper advanced 0.32% in London trade but later slipped 0.675% in New York. Lead lost 0.23%, nickel 0.53% and tin 0.35%. Aluminium closed unchanged and zinc gained 0.69%.

TRADING THEMES THIS WEEK

US REPORTING SEASON: This is one of the busiest weeks of the Q3 profit season. The season began well - 79% of reports to date have beaten analyst expectations, 11% have matched, and 10% have come in below - but Friday's reports raised some doubts. Apple is due to report just after close of trading tonight in the US. The week gets busier as it advances.

OIL: Friday's rise made it seven gains in seven sessions. "Demand is coming back and the weak dollar is spurring purchasing," said the MD of a US futures trading firm quoted on MarketWatch. "I think people are trying to get into the inflation trade and I thing $80 crude will be here by the end of October."

ECONOMIC NEWS: The US reporting season will dominate trading this week but the economic calendar is busy. Locally today, RBA Assistant Governor Phil Lowe makes a speech in Sydney at 1 pm. Tonight in the US, Ben Bernanke is due to make a speech and there are housing data due.

Good luck to all.