daytrade diaries... january 27

Morning traders.

Market wrap: Australian stocks are set to open lower for a fourth session after a soft night in the U.S. wiped out Monday's meagre gains.

Futures traders expect our market to open 32 points down on Monday's close. The local March SPI futures contract finished at 4621.

U.S. shares initially rallied overnight on upbeat earnings and consumer confidence data but swooned into the close to finish pretty much where they started the week. The S&P 500 fell 0.42% and the Nasdaq 0.32%, while the Dow was little changed at -0.03%.

Market analysts pointed to investor nerves ahead of big local news this week - tonight's State of the Union address and Federal interest rate statement, plus Ben Bernanke's battle to win a second term as Fed Chairman.

"For the most part this has been a pretty good earnings season, but clients, investors, they're concerned or tentative about what's going on in Washington," a market strategist told MarketWatch. "Everyone's afraid to buy into the market ahead of the State of the Union address."

The U.S. consumer confidence index hit a 16-month high in January. It was its third straight increase and beat economists' consensus expectations.

But the market was dragged lower by sliding financial stocks ahead of the President's address. The S&P Bank Index lost 2.45%, airlines 1.5%, oilers 0.9% and gold/silver miners 0.8%. The day's gains came largely in defensive sectors such as utilities and health.

Crude oil retreated overnight ahead of weekly U.S. inventory data, which is expected to show a rise. Crude was recently trading at $74.52 a barrel, down 1% for the session, and little changed since Monday.

A one-month high for the U.S. dollar snapped copper's two-day winning streak and sent other base metals lower. In London, copper lost 1.7%, aluminium 1%, lead 2.8%, nickel 1.7%, tin 1% and zinc 0.8%.

The price of gold is unchanged since Monday. Rising U.S. consumer confidence helped the spot price recover early overnight losses to trade recently at $1,097 an ounce.

European markets rallied for the first time in a week as Britain finally inched out of recession. The FTSE rose 0.31%, Germany's DAX 0.67% and France's CAC 0.67%.

TRADING THEMES TODAY

SWING TRADES: We didn't get the overseas lead we wanted but this morning is ripe with possibilities for swing traders. A week of falls has brought dozens of shares back to support levels and plenty have shown bullish rises off support during the last two sessions despite the overall market weakness. I'll look to trade these patterns but probably close out before the session ends - there are too many potential market-movers in the U.S. tonight and the mood remains jittery.

ECONOMIC NEWS: The quarterly consumer price index is the big local event today at 11.30 am. A strong reading will strengthen the case for an interest rate rise next week. Also this morning: the monthly leading index of economic indicators at 10.30 am. Tonight in the U.S.: new home sales, the Fed's interest rate statement, President Obama's State of the Union address, crude oil inventories and a speech by Treasury Secretary Tim Geithner.

Good luck to all.