daytrade diaries... september 18

Morning traders.

Market wrap: The trading week looks likely to end on a soft note after modest retreats on Wall Street and resources markets.

After advancing strongly all week, US equities took a breather overnight, closing narrowly in the red as investors digested a mixed bag of economic news. The Dow fell 7 points or 0.08%, the S&P 500 gave back 0.31% and the Nasdaq lost 0.3%. Earlier, European markets improved. The FTSE added 0.78%, the DAX 0.54% and the CAC 0.56%.

There was further evidence of recovery in the US. Housing starts hit a nine-month high, factories in the Philadelphia area increased production as the economic outlook improves and the net worth of the average American rose for the first time in two years. But new jobless claims have been static for nine weeks, suggesting employers are still reluctant to commit to this recovery by hiring. Analysts said an up-tick in employment is crucial for any recovery to gather momentum.

US airlines continued their extraordinary run since mid-July, rising 1.83% against the trend. Financials were the major drag on the market. The S&P Bank Index slipped 2.13%. Precious metals miners also retreated, losing 1.77% as gold and silver pared recent gains.

Gold futures fell off an 18-month high as the US dollar bounced off its lowest level this year. Gold for December delivery, the most active contract, fell $6.70, or 0.6% to $1,013.50 an ounce. Crude oil futures were little changed as traders weighed the weaker dollar against the economic news, recently trading 4 cents or 0.06% lower at $72.52.

Yesterday's big bounce in base metals faded, with prices falling for copper, lead, zinc and nickel. Aluminium squeezed out a small gain.

Futures traders expect our market to give back a little of this week's gains at the open. With 40 minutes left to trade, the SPI futures index was 19 points lower at 4709.

TRADING THEMES TODAY

PROFIT TAKING: There's not enough gloom in the overnight action to justify a rush for the exits, but there's likely to be some selling after two days of huge advances. It's probably not a day to go in hard at the opening bell - better opportunities may come later in the session.

PATIENCE: When the market doesn't offer a clear direction, I try to sit on my hands until a clear opportunity presents itself. Yesterday, there were just two. It was boring but proved just as profitable as many other days when I traded everything that moved. Learning not to take trades to cure boredom is one of trading's biggest challenges IMO.

Good luck to all.