daytrade diaries... september 29

Morning traders. The sun is shining!

Market wrap: Stocks are set for a big open after a surge in merger activity launched Wall Street's best night in more than a month.

US equity indexes wiped out most of last week's losses as deals involving Xerox and Johnson & Johnson were interpreted as proof that big business is confident about the economic outlook. The S&P 500 rallied 1.78%, the Nasdaq 1.9% and the Dow 128%.

European markets fared even better. Germany's DAX jammed on 2.78%, France's CAC 2.3% and Britain's FTSE 1.64%.

"This has obviously perked us up even though volume is low," said an American chief investment strategist quoted on MarketWatch. "You've got two big companies out here willing to stick their neck out and do some M&A, so people are thinking maybe they're seeing things are a little bit better."

Advancers outnumbered decliners by six to one. Standout sectors included REITS +4.15%, insurers +2.88%, telecoms +2.57%, banks +2.2%, industrials +1.87%, oilers +1.89%.

Crude oil futures saw some relief as tensions in the Middle East over Iran's nuclear aspirations raised supply fears. Crude futures climbed 1.24% to recently trade at $67.06 a barrel. Gold rallied initially but the spot price faded in the last few hours to trade at $989.80, virtually unchanged since yesterday morning.

There was also minimal change on the London Metals Exchange as the equities rally helped base metals finish off their intraday lows. Copper ended down 0.13%, aluminium added 0.83%, lead gained 0.69%, nickel lost 0.89%, zinc lost 0.16% and tin closed unchanged.

Futures traders expect our market to vault higher at the open. With 20 minutes left to trade, the SPI futures index was up 51 points at 4739.

TRADING THEMES TODAY

RALLY TO MONTH-END?: Our market showed bullish signs throughout this brief period of weakness and last night's US action was the move that the bulls were looking for. Tomorrow is the last day of the month and these tend to be strong as fund managers push their holdings higher to "window dress" the accounts before reporting to investors. We could see two strong sessions.

BREAKOUT TRADES: A big positive open means the best opportunities today should be in shares smashing old resistance levels. We've had more than a week of consolidation, so there will be plenty of potential candidates. One technique is to set price alerts at or just above the old resistance and try to pounce on breakouts as they occur. These trades generally require quick trigger fingers as up-moves are often explosive.

ECONOMIC NEWS: Tonight's action in the US includes house prices for July and this month's consumer confidence reading.

Good luck to all.