Which way to turn? Tue May 4

The market doesn't quite know which way to turn. The increasingly volatile US market rallied strongly last night but I still think that the Australian market does not take it too seriously at present. It could have been an opportunity for buyers to step into the resource sector but the repercussions of the Henry review are worse than the worst case scenarios imagined leading into it; ie, all the sticks but none of the carrots. That leaves the non-resource sector but a, it's not looking especially cheap, b, there's a rate rise coming today or next month and c, the backlash could be so intense that the Henry recommendations are watered down in next week's budget and then the resource sector can rally and switching out of resources might have to be reversed.
The result is a market which is up a mere 3 points at 11.15 am after a 20 point rise early. I'm sitting on my hands but itchy to do some bargain hunting in resource stocks while grateful that I sold out some intraday resource longs yesterday. Fortescue, for example, was right on long term support at 439 last night but has crashed through that with barely any resistance to be trading at 421.

12.30 pm On the subject of bargain hunting, I've bought a few Alumina at 157, with the idea of buying a few more on the back foot. My stop is around 148, give or take a margin for error/whippy trade.

Unlike some of the other stocks where you might be catching a falling knife, Awc is at least showing signs of support above the late February low. It's not a momentum stock either so may not have the panic selling element.

The selling continues, by the way, and the market is down 22 points with early strength in the banks starting to fade.

3.18 Another 25bp rate rise takes the official rate to 4.5% and the market is down 40 points now as the capitulation continues in the resource stocks and the banks slip too.

Bought a few more Awc at 155 to average 156. They're down at 154 now.