daytrade diaries... december 23

Morning traders.

Market wrap: Local stocks have a platform for a second day of gains after Wall Street nudged 14-month highs overnight.

Futures traders expect our market to open in positive territory in the last full day of trade before Christmas. The SPI futures index closed 20 points higher at 4708 after Wall Street edged higher for a third session on signs of recovery in the U.S. housing market.

The S&P 500 closed 0.36% ahead at a fresh 2009 high. The Dow gained 0.49% and the Nasdaq continued to outperform both, up 0.67%.

American investors were encouraged by exceptionally strong November existing home sales. Home resales rose 7.4%, more than double the 3.3% increase economists expected. But the market's gains were limited by news that the government's third-quarter GDP estimate was revised downward to a 2.2% annual rate, below the 2.7% rate economists had expected.

"There still continue to be a lot of problems in the economy, especially when you get into 2010," a senior manager at an investment research company told MarketWatch. "That's not to say the rally is over, but the risks to the downside are pretty significant at this point."

Airlines were the big winners among U.S. sectors, rising 4.56%. Oilers climbed 0.76%, REITs 0.95% and precious metals miners edged higher at +0.33%. Financials were mixed.

European markets rallied for a second day as banks rebounded and oil majors advanced. Britains FTSE gained 0.65%, Germanys DAX 0.26% and Frances CAC 0.68%.

The U.S. dollar was boosted by the improving economic outlook, pressuring commodity prices. The dollar index, which measures the greenback against a basket of major currencies, was recently up 0.32% at 78.28. Analysts said momentum was propelling the dollar. The greenback hit a two-month high against the yen and a three-month high against the euro.

Crude oil futures shrugged off a stronger U.S. dollar to touch $75 a barrel in volatile trade ahead of tonight's American inventories update. Futures slipped in early trade after OPEC left output quotas unchanged but recovered to trade recently at $74.01 a barrel, up 0.39%.

Gold slipped to a seven-week low as the rising greenback reduced the metal's investment appeal. The spot gold price was recently trading at $1,082.80 an ounce, down around $9 or -0.8%.

Base metals were down in London as inventories continue to rise. Copper fell 0.9%, aluminium 1.1%, lead 0.6%, nickel 1% and zinc 0.16%.

TRADING THEMES TODAY

STEADY AS SHE GOES: Hopefully a day of steady, unspectacular gains. The market often crawls higher on these seasonal low-volume days because there isn't the same weight of institutional selling to hold it down. Scalping opportunities tend to be rarer, so I try to find overnight holds to suit these calmer conditions.

ECONOMIC NEWS: The local calendar is empty from now until shortly before New Year but the US keeps pumping. Tonight: new home sales, crude oil inventories, personal income & spending, revised consumer sentiment and inflation expectations.

Good luck to all.