daytrade diaries... december 10

Morning traders.

Market wrap: Stocks are poised for a modestly positive start after a late rally on Wall Street eased worries over further slides in commodity prices.

Sentiment in the US was boosted by surprisingly strong wholesale-inventory data, which helped the major indexes edge higher after spending much of the session in the red. The Dow Jones closed 0.5% higher, the S&P 500 rallied 0.37% and the Nasdaq 0.49%.

A Commerce Department report showed inventories of U.S. wholesalers increased in October, snapping a run of 13 declines and fuelling hopes that production may pick up. The news bolstered expectations for tonight's weekly jobless-claims data and tomorrow's November retail-sales data.

Trading in the US was also helped by an afternoon retreat in the US dollar. The dollar index, a measure of the greenback against a basket of major currencies, was recently down 0.4%. Analysts said investors were reassessing the recent rally which drove the greenback up 2.7% to its highest level in more than a month.

There was some relief for precious metals miners after a torrid week. An index of gold/silver miners bounced 2.57%. Elsewhere, there were modest gains for most sectors except oil as the price of crude tumbled to a two-month low. Crude futures were recently trading at $70.85 a barrel, down 2.68% after US government data confirmed weak demand and rising inventories.

Gold benefitted from the afternoon fade in the US dollar. The spot price was recently up $1.30 at $1,129.60 an ounce after earlier pushing through $1,140.

European markets fell again after Spain joined Greece and Dubai on the credit ratings watchlist. Standard & Poor's cut its outlook on Spain to negative and warned of the risk of a debt downgrade, a day after Fitch cut Greece's rating and Moody's downgraded six Dubai issuers. Britain’s FTSE shed 0.37%, Germany’s DAX 0.72% and France’s CAC 0.74%.

Downbeat Japanese GDP data yesterday quashed hopes of a quick pick-up in demand for base metals but there were gainers amidst the overnight losers. In London, aluminium climbed 2.17% and nickel 1.89% but there were falls for copper -1.15%, lead -0.37%, tin -1.19% and zinc -0.95%.

Futures traders expect our market to open at a small premium to yesterday's close. The SPI futures index closed 5 points higher at 4635.

TRADING THEMES TODAY

BOUNCE TRADES: Yesterday's lower open after three days of losses brought buyers back into the market and set up solid gains for many stocks. I'd expect a similar pattern today (provided there are no nasty surprises in today's economic releases). There should be good buying at support levels this morning for swing traders.

BASE METALS: Base metals have proved remarkably resilient during this week's commodity rout, suggesting there is less speculative money in the complex than analysts believed. The uptrends appear intact for all except nickel. Aluminium in particular seems to be finding fresh support this week as its prospects are re-rated against copper.

ECONOMIC NEWS: A busy week for local news continues today with consumer inflation data at 11 am, November unemployment figures at 11.30 am and a speech by RBA Assistant Governor Guy Debelle at 12.00. In the US tonight: unemployment claims, trade balance and Federal Budget balance.

Good luck to all.