daytrade diaries... august 27

Morning traders.

Market wrap: Stocks face a soft start to the trading day after a flat night on overseas markets.

Fresh evidence of recovery in the U.S. housing market produced early gains for American equities but they finished the session little changed. The Dow added 4 points or 0.04% and the S&P 500 and Nasdaq both closed flat at +0.01%. Earlier, key European markets gave back around 0.5% each.

Sales of new homes in the U.S. climbed 9.6% in July - significantly stronger than expected. Another closely-watched measure - the inventory of unsold homes - fell to its lowest level since early 2007. However, there were mixed signals from durable goods data, with an overall rise in orders last month tempered by an unexpected fall in a key indicator of business investment.

Crude oil futures slipped for a second session after two separate reports of an unexpected rise in U.S. stockpiles. Oil was recently at $71.40, down 46 cents or less than 1% from yesterday. This week's choppy action in oil prompted analysts at Commerzbank to warn clients: "The party in commodities markets seems to be coming to an end now. For us, it is merely a question of time until a powerful, medium-term correction occurs."

Base metals were mixed. In U.S. trade, copper benefitted from the positive economic data but surrendered most of its gains by the close. Lead rose for the fourth straight session but finished well off its intraday high. Aluminum and nickel fell, and zinc was unchanged. Gold futures were little changed at $945.80, up 90 cents since yesterday.

Futures traders have a mildly negative bias for the start of the session. With 30 minutes left to trade, the SPI futures index was down 10 points at 4421.

TRADING THEMES TODAY

UNCERTAINTY: The overseas action offers no compelling reason for our market to move strongly in either direction, so regional markets may take their lead from China - a volatile and unpredictable guide. Shanghai looks to be in recovery mode after tumbling 20% in three weeks, but sentiment remains fragile.

BIOTECHS: American biotechs have been charging higher all week. The NYSE biotech index was a standout for the second night last night - up 3.13% in a soft session for other sectors. When a sector runs hot overseas, it's always worth picking over the local sector.

COMPANY REPORTS: Overall, this reporting season has surpassed expectations but there seem to have been more negative surprises in the second half than the first. Due to report today: ABP, ACR, AIZ, AJL, BBC, BBW, BDG, BGD, BKL, BVA, CLQ, COE, CWN, EQT, FKP, GNS, GPT, HDF, HGG, HSP, IFN, KCN, LMW, NAB, NMS, OZL, PFL, RHC, SGX, SUL, TOL, TTS, VBA, VRL, WOW. (Sources: Egoli, BRR)

Good luck to all.