daytrade diaries... august 28

Morning traders.

Market wrap: Stocks look set for a positive start this morning after an eighth straight night of gains in the US - the longest winning run in two years.

The Dow Jones index closed 0.39% higher after reversing early losses on healthy demand for a Treasury note auction and a bounce in crude oil futures. The index's recent winning streak is its best since April 2007, although volume has been light and recently gains have been shrinking. The S&P 500 added 0.28% and the Nasdaq rose 0.16%.

Earlier, the Commerce Department released data showing that the recession eased its grip on the US in the second quarter. Real GDP fell 1%, a big improvement on the 6.4% plunge in the first quarter. In addition, new claims for unemployment benefits fell for the first time in three weeks.

European markets took their lead from yesterday's weakness in Asia and retreated for a second consecutive day, losing from 0.5 - 1%.

Crude oil futures dipped below $70 in early trade but reversed as the US dollar weakened and sentiment improved on equity markets. Oil for October delivery was recently trading at $72.84, up more than 1.5% on yesterday. Gold futures have been stuck in a narrow trading range for the last fortnight, currently up $4.10 at $949.60.

There was no significant action on base metals markets overnight. On the LME, copper fell 0.3%. Lead, zinc and nickel eased marginally and tin and aluminum rose but overall there was minimal price change.

Futures traders expect our market to open modestly ahead this morning. With 45 minutes left to trade, the SPI futures index was up 10 points at 4459.

TRADING THEMES TODAY

TOPPING OUT? The longest winning streak on the Dow Jones index in more than two years should be very bullish but this week's action has been "toppy" and unconvincing. US markets have been crawling higher after developing a worrying ability to shrug off good news. In other words, equities look ripe for a correction as we near the traditionally troublesome months of September and October. That said, any pullback is likely to be minor and should be a buying opportunity.

FRIDAY FADE: This phenomenon reflects the fact that many traders like to close out positions before the weekend, placing downward pressure on prices during the afternoon. Some traders refuse to open new positions after lunchtime because of this. I'm always cautious after 1pm on Fridays and rarely open a new position unless the opportunity is impossible to ignore.

COMPANY REPORTS: We're nearing the end of the deluge. Due today: ACL, AIA, AMU, APE, AUB, BBP, BEC, CPR, CST, CTX, CYG, EAL, ENV, FWD, HDF, HVN, IGO, PAG, PTM, SGM, SHL, SLX, TGR, TOX. (Sources: Egoli, BRR)

Good luck to all.