LONDON appeared to shrug off the "sell in May" curse that had dragged the FTSE 100 index down 80 points over six straight trading days.
But a rebound in Footsie yesterday masked a slide in the second line index. And the futures market, which has led much of the recent selling, was still trading at a discount to the underlying cash market.
Consequently, some technical analysts who have a bullish view on the market were beginning to look nervously at their computer models.
And many dealers remained sceptical that there was much to go for in the near term. Most had already cut their prices and were merely hoping that the Footsie futures contract was not going to fall much further.
Their wishes were only partly granted. The future did bounce but still continued to be priced at a discount to cash.
However, there was a lift from a few individual items of corporate news. Tomkins, the conglomerate, announced that it had received approval in the US for its proposed acquisition of Gates Rubber. And there was relief that the massive trade in National Grid late on Tuesday night may have represented nothing more daunting than a tax related deal.
The other side of this so called "bed and breakfast" trade appeared on the trading screens first thing yesterday and was responsible for 12 per cent of yesterday's turnover of 745.3 million shares. That figure was well down on Tuesday's level when genuine customer business was worth £1.85 billion.
Lower down the league of quoted companies, the news was less encouraging. A profits warning from Danka Business Systems came hard on the heels of Tuesday's suspension of trading in Wickes, the DIY chain.
Danka's announcement continued the perceived shift from earnings upgrades to downgrades and was partly responsible for the FTSE Mid 250 index falling 19.2 to 4,365.3. The Mid 250 has outperformed the Footsie by 10 percentage points since the start of the year.
Some attention was taken away from equities by the latest government bond auction, which was covered 4.5 times and described by one trader as "the most successful ever".
And in the US, there was a return of inflationary concern after the Commerce Department announced that orders for durable goods rose by 3.3 per cent in May, the largest increase for almost a year.
With the Dow Jones Industrial Average down by about 10 points when London closed, Footsie ended 16.0 up at 3,695.5, back towards the bottom of its recent trading range, which is seen to be between 3,650 and 3,850.
Mr Robin Griffiths, the chief technical analyst at HSBC James Capel, said his forecasts had been "temporarily embarrassed by the plunge below 3,700". But he believes that there is no reason for concern as long as Footsie holds above 3,650.
"This is actually a cheap market well underwritten by fundamentals. We know the cliche about selling in May and going away but unfortunately we forget it every year", he said.
