daytrade diaries... october 28

Morning traders.

Market wrap: The Australian stock market is set to open in the red for the third straight session after a mixed night on overseas equity and resources markets.

Wall Street gyrated in and out of positive territory as investors assessed a welter of conflicting economic indicators. The session featured a weak consumer confidence reading, falling manufacturing activity, a bounce in the US dollar, a healthy rise in home prices and a strong auction of Treasury notes. The final result was inconclusive: the Dow closed 0.14% higher, the S&P 500 lost 0.33% and the Nasdaq retreated a heftier 1.2%. European markets were just as uncertain - London's FTSE rose 0.18%, Germany's DAX lost 0.13% and Paris's CAC closed flat.

Tech stocks and financials were the main drags on US markets. Also soft: REITS - 1.54%, industrials -1.69%, precious metals miners -1.35%. Oilers, natural gas companies and pharmaceuticals were among the few sectors to advance.

Crude oil bounced on expectations of positive news from US inventory data after the closing bell and tonight. Crude futures rallied 1.11% to recently trade at $79.35 a barrel. Gold futures dipped as the US dollar hit a two-week high against the euro but the spot price was recently marginally higher than yesterday, up 80 cents at $1038.80.

Base metals drifted lower. In London, copper lost 0.57%, aluminium 0.9%, lead 3.77%, nickel 0.27%, tin 1.02% and zinc 0.86%.

Futures traders don't see a break in this week's paced retreat on our market at today's open. The SPI futures index closed 21 points lower at 4743.

TRADING THEMES TODAY

SURGING AUSSIE DOLLAR: Yesterday's WorleyParsons AGM confirmed that a rising dollar is a two-edged sword - there are big winners and big losers. WorleyParsons plunged 8% yesterday after revealing the impact of a strong dollar on its earnings. That's a red flag that will catch the attention of short-bias hedge funds. They'll scour the indexes for companies with similar exposure. Any companies with substantial overseas earnings bases will now come under scrutiny.

'CASH ON SIDELINES' THEORY: This week is an interesting test of the idea that there is too much uninvested money looking for a home for the stock market to fall very far. Until now, any two-three day dips in our market have been buying opportunities. If that's still the case, we should see a bounce in the next day or so.

ECONOMIC NEWS: A busy day ahead. Local consumer price index data are due at 11.30 am and skilled job vacancies at 12.00. Tonight in the US: September new home sales, mortgage applications, durable goods orders and crude oil inventories.

Good luck to all.