daytrades may 21 pre-market

Morning traders.

Market wrap: The Australian share market is set to open more than 2% lower after Wall Street smashed through key technical support levels and into an official correction.

The local June SPI futures contract closed 106 points weaker at 4211, suggesting local stocks will start the day at levels last seen in late July 2009.

The slide came after a sharp sell-off on Wall Street as the major indexes broke below the May 7 "fat finger" closing lows and under the 200-day moving averages closely followed by trend investors. The Dow Jones Industrial Average gave up 376 points or 3.6% to close at 10,068. The S&P 500 fell 3.9% and the Nasdaq 4.11%. The S&P 500 is now down more than 11% since the April market high - a correction is traditionally defined as a retreat of more than 10%.

The falls came after weak economic data raised doubts about the strength of the U.S. recovery, adding to fears that European austerity moves will undermine global growth. Jobless claims unexpectedly jumped to 471,000 last week, much higher than expected, and an index of leading economic indicators slipped 0.1%.

"We are clearly in corrective territory," the chief equity strategist at a U.S. asset management firm said in a Bloomberg Television interview. "Europe has to stabilise, we need further evidence of cyclical improvement here in the U.S. and a little less volatility. When we get those things, we believe the cyclical bull market will resume."

European stocks also fell as Germany's decision to act alone in banning short selling in key investments underlined divisions within the E.U. over how to handle the debt crisis. Britain's FTSE dropped 1.65%, Germany's DAX 2.02% and France's CAC 2.25%.

"The European community seems less cohesive, Germany is saying one thing and then France is coming out and saying something different," a U.S. market strategist told MarketWatch.

Wall Street's "fear gauge", the VIX, jumped 31% to 46, its highest level in more than 13 months.

A sharp afternoon recovery in the euro did little to ease the pressure on commodity prices, as investors continued to abandon any so-called "risk assets". Crude oil for July delivery was recently down $2.83 or 3.9% at $69.65 a barrel after the weak U.S. jobless numbers crushed hopes of a bounce after three weeks of heavy losses.

Gold dipped in and out of positive territory but the spot price was recently $8.40 or nearly 1% lower than Wednesday's New York close at $1,183 an ounce.

Battered industrial metals continued to slide. Copper erased early gains to fall 1.6% to a three-and-a-half month low in New York. In London, copper fell 0.6%, aluminium 2.1%, lead 1%, nickel 2.2% and tin 2%.

TRADING THEMES TODAY

SCALPING: If you're not short-selling or riding the diminishing handful of bolters each day, one way to make a living in these conditions is in short sharp bounce trades. And when I say "short", I really do mean short. My most profitable trades yesterday were measured in minutes, buying shares at "waterfall lows" and selling into short bounces before they faded. It's dangerous stuff and there were losses as well as wins. Do not attempt this for the first time without spending a lot of time watching intraday charts to see how shares perform. Eventually, buying and selling at turning points becomes instinctive but it takes a long, long time with many expensive lessons along the way. This is a good time to begin to learn by watching. The charts can tell you all you need to know.

ECONOMIC NEWS: There is nothing scheduled here or in the U.S.

Good luck to all.