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Mixed messages

S&P holds up

I suggested late last week that the S&P was the one to watch. And since its message is broadly bullish, so should we be. Via Twitter, Thierry Laduguie - @eyield - disagrees. "Once again the FTSE is leading the way [lower]," he wrote on Friday, 21 March. "My view is that the FTSE is the leading index in the world, not the S&P or Dow…When the global economy slows down, FTSE is more sensitive than S&P, hence it anticipates trends better."

Tech troubles

I don't really see the FTSE as the barometer that Thierry does, though. The index has lagged the S&P 500 - and various other markets - for most of the bull market since March 2009. None of this has spelt doom for the wider uptrend in equities. It is also true that the FTSE peaked ahead of the S&P back in 2007, as Thierry points out. But there is no consistent record of this happening over time, as far as I can see. The FTSE's recent limpness is therefore not a worry for me.

FTSE flicker

As it happened, the FTSE did stage a nice little bounce back above its 200-day moving average on Tuesday, 26 March. From its session lows to its session highs, the index gained 1.3 per cent. This is just the sort of action I would look for to signal the resumption of an uptrend. My guess would be that the index can now head back to its recent highs around 6870. A swing of the same proportions that we have seen twice in the last few months would take the FTSE to 6944, near enough its all-time highs. (You can read my longer-term outlook for this index here: http://bit.ly/1o0oKXh)

FTSE 250 languishes

One thing that does unsettle me rather more, though, is the FTSE 250's slide. The fortunes of the mid-cap index are a much better gauge of the appetite for risk-taking in UK equities, and therefore of the likelihood for further near-term gains, than the FTSE 100. The mid-cap index has so far failed to snap back decisively after its 4.4 per cent drop from its all-time highs, while it has been underperforming the slack large-cap index for the last week.

Despite this, I am still hopeful for more near-term gains from the FTSE 250. The uptrend since October 2011 is still plainly intact. What's more, its sell-off since late February has been of the same mould as the dips that were seen on four previous occasions since last summer. Each ended at around the 50-day average, where the price has lately been resting, and each was followed by a fresh run to new all-time highs. That is the most likely outcome this time round, as I see it. A run above 17000 is my call.