daytrade diaries tuesday, page-2

Tricky day ahead for short-term traders, with prices likely to open sky-high on the back of the US rally. Current short-term momentum is up, so it makes sense to go long, but overpaying today could be costly.

If, as MarketWatch suggests, much of this week's US rally is built on expectations for a government bail-out for car-markers, then it seems to me there are only two possibilities: the bailout falls through and the market tumbles; or the bailout goes through and the market tumbles as those who bought the rumour sell the fact. US futures have already unwound 80 points.

That said, you have to go with the flow and the overnight bounce in copper, oil, gold, RIO and BHP means it's time to dust off those commodity bull horns - for today at least. I'll be looking for beaten-up resource stocks showing hints of a recovery, momentum trades, plus anything that might benefit from a short-covering rally. We should see some extreme rallies today as shorts scramble.

Stay nimble and good luck to all traders.