FTSE100 lagging - opportunity or warning?

[Mercury]

With the US large Caps rallying like crazy it is easy to get caught up in the notion that the only way IS up for all stocks indices but why haven't the European indices followed, if on a macro level they are all joined at the hip?  Nasdaq and Nikkei have not been a exuberant either, both retracing to only 50% or so, rather than the 62% and 76% areas of the 2 main US large caps.  The FTSE is somewhere between the Fib 23 and 38% levels while the Dax has only managed a paltry 23%...  We know markets don't go in straight lines so are the US large caps due for a retrench drop or are the European indices set for a charge forward?  Or maybe both in the fullness of time?

If we look at what happened on the US large caps last time we got such a sharp correction we see a very exuberant "buy the dips" rally and then an almost equally strong retrenchment before what I would consider a more normal rally got going.  Odd are we are going to see the same again I think, unless this is a hyper "end of Bull" charge but then why aren't all the indices doing the same?

If we do get a strong push back down on the US markets it should come soon as all of them are approaching significant resistance zones.  If that does happen then (looking at the Dow - below) we might see a retrace of 50% back to the Bear channel breakout zone before a turn back up.  The FTSE100 is still stuck in retrace at present so we could see a completion of this back to retest the breakout channel line or further down before a very strong catch up rally.

Given the strength of the US rallies I think some form of retrenchment is indicated, I have sold my longs off and will await events.  Sell strength, buy weakness as the saying goes...

After than I will be looking at the European stocks (I favour the FTSE for this as the DAX is too volatile with only 30 companies in it) as they offer perhaps better upside potential vs margin requirement etc etc.

Anyone willing to offer any thoughts on how they are playing the indices right now?

[Mercury]

Dow bounced back off the Fib 76% resistance zone in line with all other indices.  Chance there could be one more leg up to the 78% so stops should be above that but could be a decent Short for a while until we figure out if this is the end of a natural retrace of a bigger bearish move or the beginning of a natural retrace before an eventual move higher.