Keeping us guessing. Wed May 26

It turns out that Korea was the driver of the afternoon weakness yesterday. I noticed that they were particularly weak yesterday but didn't realise that the action had stepped up over there. The US indices reversed to close squareish last night, perhaps helped by reports that major troop movements were not taking place in South Korea as earlier reported.

At present, nearing 11 am, the market is pulling back from a very strong open but is still up 74 points or 1.9%. The Kospi has opened only cautiously stronger so I suppose that's the focus of attention and the reason why we're easing back apart from fatigue with all this short term volatility.

On a short term basis, the odds have swung back in favour of a rally even if it's just a second swing up before further weakness. I'm glad I did a spot of bargain hunting on the match out last night because there weren't many bargains on the open. I was working with a scenario that the US would open weaker then recover somewhat but the bounce was more than I imagined.

I did manage to pick up some Alumina at 156.5 and that's the featured trade for today. Even more so than yesterday's trade in Ozl, Awc is holding above February and early May lows. Rio is making bullish noises about Aluminium also, so maybe this could develop into a run up to 180ish rather than just a retracement rally. I probably wouldn't stay in for that long, but it would provide a road map where I might look to buy dips. Here's the daily chart.

3.20 pm The market was looking ominous around noon and the possibility of a big reversal down was presenting itself. The Kospi steadied though and is now up 1% plus after being down early and it has helped Asian markets and the Australian market to hold on to gains. We're still quite nervy even though the market is up 57 points.

It feels like a turning point to me in the sense that the market is still tentative while so much bad news is out there that it's hard to imagine much else having an impact. In the meantime though, any ill effects are potential or in the longer term and markets are starting to present quite good value.

4.15 Still a bit soft in the afternoon with the market ending higher by 42 points. The panic du jour in Korea seems to have eased with the Kospi up around 1.4%.