daytrade diaries... october 8

Morning traders.

Market wrap: Stocks look likely to consolidate today after a cautious night on Wall Street ahead of the start of the U.S. reporting season.

Investors will watch U.S. futures for the reaction to bellwether Alcoa's third-quarter earnings report, which was released just after the closing bell on Wall Street. (Track US futures here: http://liveindices.com/) The company reported a surprise profit, ending three straight quarters of losses and beating Wall Street's expectations.

Indexes traded in a tight range ahead of the report as investors resisted placing big bets before earnings season. The S&P 500 rose 0.27%, the Dow Jones slipped 0.06% and the Nasdaq was up 0.32%.

Banks advanced 1.43% and precious metals miners gained a further 1.5%. Airlines lost 1.82% and biotechs 1.09%.

Analysts expect companies reporting this quarter to show a 25% decline in profits, improving from Q2's 27% decline. But some commentators fear the market has priced in too rosy a recovery story.

"It seems like the market has priced in a fairly robust recovery scenario," said Mike Thompson of Standard & Poor's, quoted on MarketWatch. "We've had so much good news baked in, I'm not sure if we're ready to hear some of the negative news that might be in the reports."

Earlier, European markets pulled back from yesterday's highs. Britain's FTSE lost 0.57%, France's CAC 0.37% and Germany's DAX 0.3%.

This week's bullishness in oil was tempered by news of a jump in U.S. stockpiles last week. Crude oil futures slipped 1.85% to recently trade at $69.61 a barrel after inventories increased by 2.9 million barrels, well ahead of analysts' expectations of a rise of 1.3 million barrels.

Gold took a breather after Tuesday's surge to a record high. The spot price was recently trading at $1,043, around the same as this time yesterday. Holidays in China continue to suppress trading in base metals. Metals closed mixed in thin trade in London. Aluminium rose 0.66%, nickel +1.77% and zinc +0.57%, copper slipped 0.59%, tin lost 0.65% and lead was unchanged.

Futures traders expected our market to open marginally softer after yesterday's big advance. The SPI futures index was 6 points lower at 4710 ahead of the Alcoa report.

TRADING THEMES TODAY

CONSOLIDATION?: Unless Alcoa's earnings report jolts U.S. futures or local employment figures this morning are shocking, our market seems likely to drift. Doesn't mean there won't be opportunities, of course.

ECONOMIC NEWS: Local unemployment figures for last month are due at 11.30 am today. There are interest rate decisions due tonight in the UK and Europe but no one expects them to follow the RBA and raise rates. It's a quiet night in the U.S.: jobless claims, wholesale inventory data and chain store sales.

Good luck to all.