daytrades august 3 pre-market

Morning traders.

Market wrap: Australian shares are set to open near a six-week high after a powerful surge in overseas equities and key commodities overnight.

The local September SPI futures contract closed 64 points higher this morning at 4569, suggesting our market should start the trading day nearly 1.5% stronger. The major European and U.S. share indexes rallied up to 3% overnight and oil smashed overhead resistance as up-beat global economic data and company reports encouraged a run on "risk assets".

The S&P 500 put on 2.2%, the Dow 208 points or 1.99% and the Nasdaq 1.8%. European markets also charged as strong European bank earnings and manufacturing reports confirmed that the continent is coming through its debt crisis in better shape than many commentators expected.

"You've got earnings numbers coming out that confirm some of the information coming out of the European bank stress tests," a U.S. chief investment officer told MarketWatch. "It confirms that there is perhaps less of a reason to be concerned about the financial sector."

Britain's FTSE added 2.65% overnight, Germany's DAX 2.34% and France's CAC 2.99%.

Sentiment in the U.S. was also helped by generally positive local economic data. A measure of manufacturing growth eased less than expected and still showed the sector expanding, while construction spending unexpectedly increased. And in a speech overnight, Federal Reserve Chairman Ben Bernanke said rising wages would support economic growth in the coming year, despite high unemployment.

Commodity prices kicked higher as the U.S. dollar continued to fall against the major currencies. The dollar index retreated 0.8% overnight.

Oil punched through the $80-a-barrel barrier that has held for weeks to set a new three-month high. Crude futures were recently up $2.53 or 3.2% at $81.48 a barrel.

Industrial metals powered to multi-month highs as U.S. and European manufacturing data encouraged optimism about the global economic outlook. In late trade in London, copper was up 2.5%, aluminium 2.8%, lead 8%, nickel 3%, tin 1.1% and zinc 3.5%.

"The markets are seeing a little bit better-than-expected strength in Western economies, and they are just taking that and getting exuberant... possibly irrational," a U.S. commodities analyst told Reuters.

The move to riskier assets left gold only modestly higher. The spot price was recently $1.10 ahead of Friday's New York close at $1,182.50 an ounce after an early rally in New York faded.

TRADING THEMES TODAY

OIL: Our oilers should get a big leg up today from news that the $80-a-barrel resistance level was finally smashed last night. A trader in New York said funds have been buying since Friday in expectation of a fall in the weekly report of U.S. stockpiles tomorrow night and as a Tropical depression lurks near the Gulf of Mexico. With near-term technical resistance gone, the road is open for a run towards this year's high-water mark, above $90 a barrel.

BREAKOUT TRADES: With big gap opens like this morning, the challenge for "long" traders is to find buys where the opening price is not the day's high point. The highest-probability set-ups if you can find them are 'breakout trades' where the opening price vaults a resistance level and leaves nothing but blue sky overhead. One way to harvest these is to set price alerts when you're scanning charts. After that it's all about quick reactions to get on board if an alert triggers and a tight stop-loss if the momentum flags.

ECONOMIC NEWS: An unusually busy day for local news lies ahead. Monthly building approvals and retail sales are due at 11.30 am. The main event would normally be the Reserve Bank's rate statement at 2.30 pm, however, economists say there is virtually no chance that the central bank will vary the cash rate today after last week's benign inflation data. Tonight in the U.S.: monthly pending home sales, factory orders, vehicle sales, personal income and spending and the consumer price index.

Good luck to all.