daytrade diaries... november 13

Morning traders.

Market wrap: Local stocks are set to open in the red for the first time this week after Wall Street snapped its winning streak and commodity prices softened overnight.

The Dow's six-day bull run was ended by a combination of a rising US dollar, sliding energy prices, worries over weak consumer spending and plain old investor fatigue after the best run since August. News of a White House jobs summit next month briefly lifted markets at the open but it was all downhill from there to the close. The Dow finished 0.92% lower, the S&P 500 lost 1.03% and the Nasdaq 0.83%.

The economic news was mixed. Weekly jobless claims were better than expected, but monthly readings of non-farm payrolls remained negative. Fears about weak consumer spending were further fuelled by Wal-Mart's guarded outlook in its quarterly rerport.

"It's getting harder for us to find opportunities out there in this market," a fund manager told MarketWatch. "The government is essentially providing all the final demand in the economy via stimulus. It's trying to jump start the private sector, but the only gains that have really been made there so far are on the cost-control side."

The US resources and financial sectors bore the brunt of the selling. Precious metals miners lost 2.67%, natural gas companies 2.22%, oilers 1.99% and banks 2.08%.

The major European markets were mixed but little changed. Britain’s FTSE edged 0.19% higher but Germany’s DAX lost 0.08% and France’s CAC dropped 0.17%.

A rebound in the US dollar weighed on commodity prices. Gold for December delivery hit a new high of $1,123.40 an ounce yesterday but has been in retreat ever since. The spot price recently traded at $1,103.50, down more than 1.3%.

Crude oil futures slumped after weak demand and higher imports pushed up U.S. inventories. Crude futures recently traded at $76.70 a barrel, down nearly 3% and erasing this week's gains.

Base metal prices continued to weaken in London. Most falls were minimal and left prices comfortably within recent trading ranges but nickel skidded to a two-month low after LME inventories reached their highest level in 14 years. Aluminum slipped 0.51%, copper 0.54%, lead 1.71%, nickel 3.38%, tin 0.17% and zinc 1.1%.

Futures traders expect our market to surrender a little of this week's gains at today's open. The SPI futures index closed 33 points lower at 4729.

TRADING THEMES TODAY

PROFIT-TAKING: The last six days have seen a terrific bull run and there will be plenty of investors in a position to take some cash off the table today. The fact it's the end of the week will likely add to the selling pressure. No cause for panic but it's a day to be cautious about opening new positions unless an opportunity is too obvious to ignore. I'll likely stick to scalping a few bounces where the selling looks overdone.

NICKEL: Is this the canary in the mine? Inventory levels at the London Metals Exchange have hit their highest level since 1995. As nickel is an important component in steel, this raises disturbing questions about global industrial consumption. If the world is in full-blown recovery, how come steel production isn't soaking up those stockpiles? Let's hope this isn't a harbinger of troubles to come.

ECONOMIC NEWS: The local calendar is empty today. Tonight in the use the usual end-of-week deluge includes trade balance figures, consumer sentiment readings, import price index and speeches by two Federal Reserve voting members.

Good luck to all.