daytrade diaries... september 17

Morning traders.

Market wrap: Australian stocks are primed for a second day of big advances after triple-digit gains on Wall Street and a boom night for key resources.

Strong industrial production figures fired US stock indexes to new 2009 highs and their eighth positive session in nine. Financial stocks led the gains as the S&P 500 rallied 1.53%, the Nasdaq 1.45% and the Dow by 108 points or 1.12%. European shares also made solid advances. The FTSE hit a 2009 peak, up 1.63%, the CAC rose 1.64% and the Dax by 1.27%.

Industrial production in the US leaped 0.8% in August, beating expectations, as factories boosted production of cars, machinery, food products, clothing and other goods. The consumer-price index rose 0.4% last month, in line with expectations.

Financial stocks continued to front the advances in the US - the S&P Bank Index put on 3.64%. REITs rose 4.06%, industrials 2.07%, oilers 2.36%, natural gas companies 3.17% and precious metals miners 1.81%.

A weaker US dollar and a drop in US inventories helped crude oil futures push higher. Crude was recently up 2.23% at $72.34 a barrel. Gold futures hit an 18-month high and look poised for a run at the March 2008 record of $1,033.90 after the actively traded December contract finished at $1,020.20, up $13.90, or 1.4%.

It was a strong night for base metals as rising US industrial production brought buyers into the market. Copper recorded its biggest gain in three weeks, up 3.5% in London. There were also significant recoveries for aluminium, lead, zinc and nickel after several weeks of decline.

Futures traders expect our market to build on yesterday's surge to an 11-month high. With 45 minutes left to trade, the SPI futures index was up 54 points at 4716.

TRADING THEMES TODAY

BASE METALS: Last night's big rally wiped out several weeks of gentle decline and propelled copper, zinc, lead and aluminium back near their old 2009 highs. The combination of healthy US industrial production and Bernanke's "recession probably over" statement may create enough momentum for a breakout in the next week. Nickel remains the weakest of the group and has more ground to make up before it becomes an attractive proposition.

BREAKOUT TRADES: When the futures are as positive as they are today, there should be a swag of shares breaking to new highs this morning. I'll sift my watchlists for candidates and then look for high-volume opens above old resistance levels for confirmation at 10 am.

ECONOMIC NEWS: The RBA's Monthly Bulletin is released at 11.30am this morning. Tonight's economic news in the US includes August housing starts and the Philadelphia Fed Index manufacturing survey.

Good luck to all.