daytrades feb 23 pre-market

Morning traders.

Market wrap: Wall Street's worst session since August and heavy overnight falls in industrial metals have set up a weak open for local shares.

The March SPI futures contract ended the night session 44 points or 0.9% weaker at 4802 as US stocks played catch-up following two days of losses in Europe and Asia fuelled by violent clashes in Libya and a soaring oil price.

US stocks erased last week's gains overnight as risk aversion gripped Wall Street. The S&P 500 plunged 2.05%, the Dow lost 178 points or 1.44% and the Nasdaq dropped 2.74%. Oil climbed to its highest level in more than two years, feeding fears that rising inflation may crimp the global economic recovery.

"If oil continues to rise and the dots get connected beyond Libya, then you can set yourself up for a setback in stocks," a money manager at Loomis Sayles in the US told Bloomberg. "People are going to wait and see what type of unrest there is in the largest producing oil countries. Risk aversion is going to be everybody's assessment."

Airlines and transport stocks exposed to fuel costs were hardest hit in the US. The AMEX Airline Index fell 5.2% and a Nasdaq index of transport stocks dropped 5.1%. Financial stocks were the biggest drag on the Dow, with Bank of America and JP Morgan both losing more than 3.8%. Energy stocks and defensive stocks fared better than most but indexes still flashed red.

Oil continued to surge as clashes in Libya, the world's eighth largest oil producer, caused port closures and reduced refinery output. Oil for April delivery was recently up $5.55 or 6.2% at $95.25 a barrel.

"Libya is the first major oil exporter to be engulfed by the crisis and the first to see any significant disruption to oil production," Capital Economics said in a note quoted on Reuters.

Silver marked a new 31-year high and gold a seven-week high as investors sought hedges against inflation. Silver for March delivery was recently ahead 74 cents or 2.3% at $33.04 an ounce. Gold for April delivery rose $12.20 or 0.9% to $1,400 an ounce.

Australian miners tumbled in US trade as industrial metals suffered heavy falls. Alumina plunged 6.2%, Rio Tinto 3% and BHP 0.55%. Copper fell to a three-week low and zinc and lead lost more than 5% each. In London, copper fell 2.75%, aluminium 2.5%, lead 5.7%, nickel 2.9%, tin 2.9% and zinc 5.05%.

The major European markets extended the week's losses but pared falls before the close. Britain's FTSE lost 0.3%, Germany's DAX 0.05% and France's CAC 1.15%.

TRADING THEMES TODAY

THREE-WEEK LOW: Well, for once Wall Street delivered exactly what logic said it oughtta: a solid, session-long decline with barely a hint of a bounce. Our market will open at a three-week low this morning and the sell-off in base metals overnight will weigh on the resources sector. The insurers will likely remain under pressure from the tragic events in Christchurch and the banks will likely suffer from the threat of some of the steam coming out of the global recovery. In short, there are plenty of reasons to be bearish this morning. Nonetheless, our market will have fallen harder than most at today's open and we just might see a rally off the early low today. Last night's European indexes may offer a template: early plunge, followed by a steady recovery?

WRESTLING THE BEAR: The small end of the market is always hit hardest during corrections and has certainly copped a hiding this week. One reason is the old hands know that during pullbacks all the lovely liquidity we have enjoyed this year can dry up faster than Lake Eyre in drought. Don't be left holding the bag. At times like this, stop-loss discipline determines who stays an active trader and who becomes another passive investor with a bottom drawer full of holdings that they can't bear to look at. Protect your profits and don't let your losses run. My approach in downturns is to stick to day trading in the true sense - I sell everything by close of business, win or lose, and sleep well at night. Alternatively, stand aside until conditions are more favourable for your trading methods - successful trading is as much about the trades you don't take as the ones that you do. Stay nimble or stay out.

ECONOMIC NEWS: Reserve Bank Governor Glenn Stevens is due to deliver a speech titled "Australia and the Resources Boom" in Melbourne from 9 am today. Quarterly construction work figures and the quarterly wage price index are due at 11.30 am. Monthly existing-home sales top a slender agenda tonight in the US.

Market downturns tend to bring out the worst in human nature - let's keep it friendly today and help each other through this. It's only money. Good luck to all.