Differences between trading indicies and other markets

I've been thinking about something and would like to check my logic with the many here who have more knowledge and experience than myself.

In markets such as forex and direct equities, taking a position in the market (as opposed to in a derivative market such as that of a spread betting company), has an effect on that market, however small. It is partly as a consequence of this interaction, that things such as support and resistance levels arise.

Indices on the other hand, must follow the underlying equities, which are not affected by traders taking a position, unless the market maker hedges the position in the underlying shares. It seems to me then, that the behaviour of indices would be far less predictable throught the reading of market movements than that of instruments in which direct positions are taken.

Does this seem reasonable, or am I missing something?

Yes, you're missing index futures. Very large markets.

Seems I may have misunderstood, but the second point still stands. There's plenty of action in the indices to drive themselves. Stock markets are puddles.

How can an index drive itself? It is a product of the equities that compose it. For example, I can influence the FTSE100 by taking a very large position in BP, driving its share price either up or down; however taking a very large position on the index itself, should have no effect.

Stocks are not traded in isolation, but as part of a larger market. It's a two-way street, but in times of activity and movement, the overall market has far more weight.

Ok, I should have just googled. The effect appears to be as I speculated above, market makers taking hedging positions through baskets of shares, or through futures which are in turn hedged through baskets of shares.

http://www.financial-spread-betting....-ftse-dow.html

The section titled "Why does technical analysis work on an index?" in particular.

It's far more than just hedging, if that is what you're implying. Trading an index trades all products within the index, so it's going to be a tool widely used by those who want a position on the overall market.

Through what mechanism does this happen if we exclude hedging?