daytrade diaries... december 29

Morning traders.

Market wrap: A positive start to the holiday-shortened trading week lies ahead after the "Santa Claus" rally on Wall Street stretched into a sixth session.

Futures traders expect our market to pick up where it left off last week. The SPI futures index closed 16 points higher at 4830 after a late recovery on Wall Street overnight and gains for key commodities.

The major U.S. indexes built on Thursday's 0.5% advance to close at fresh 2009 highs in thin holiday trade. The Dow gained 0.26%, the S&P 500 added 0.12% and the Nasdaq 0.24%.

Investors were cheered by news of an increase in Christmas retail sales in the U.S. MasterCard said a late rush from shoppers and an extra day of shopping between Thanksgiving and Christmas increased total retail sales 3.6% over the 2008 holiday season.

The U.S. dollar declined for a third straight session after a weak Treasury auction resurrected fears over the crushing volume of government debt. The dollar index, which measures the greenback against a basket of major currencies, was recently down 0.08%.

Financial stocks lost ground in the US - the S&P Bank Index slipped 1.14%. Airlines fells 1.79% and precious metals miners 0.42%.

European markets have pushed to 14-month highs since Australia last traded. Britains FTSE was closed overnight but rose 0.56% last Thursday, while Germanys DAX added 0.76% overnight and Frances CAC put on 0.88%.

Oil advanced for a fourth straight session, its longest winning run since October. Crude futures were recently trading 0.85% higher at $78.71 a barrel.

Gold benefitted from tensions in Iran and a weaker U.S. dollar. The spot price edged 0.3% higher in choppy trade to trade recently at $1,106.30 an ounce.

Copper rallied 1.1% to a 16-month high overnight in the U.S. after a fall in Shanghai inventories. The London Metals Exchange was closed for Christmas but last Thursday's trade saw gains for most metals: copper +0.92%, aluminium +0.44%, lead +0.23%, nickel +1.45%, tin -0.62% and zinc +1.2%.

TRADING THEMES THIS WEEK

SANTA CLAUS RALLY: North American and European markets have enjoyed a steady, gentle rally to fresh 2009 highs over the last few trading sessions. Our market is playing catch-up and the continuing bounce in commodity prices may drive it to a new 2009 high this week.

COMMODITIES: Most commodity prices have bounced back hard since being crunched by the December rally in the U.S. dollar. Crude oil is higher now than at the start of the month. Base metals barely blinked and most are at or close to multi-month highs. Even nickel, recently the weakest link, is at a one-month high. Platinum has bounced nicely. Gold and silver continue to lag but may have found support, helped by tensions in the Middle East and the Delta Airlines terrorist attack.

ECONOMIC NEWS: Australia remains basically closed until the new year but the U.S. continues to churn out data. Tonight: consumer confidence and the Standard and Poor's House Price Index.

Good luck to all.