The major market averages made a valiant recovery from their opening lows and rallied right back to last week's relative highs, but were unable to push through their near-term levels of resistance.
At one point, the Dow Industrials (INDU) 8,685 -0.29% traded down what's getting to be a modes 136 points, to rebound into positive territory and actually tack on a 23-point gain, to settle back at current levels. My near-term resistance/support levels on the Dow Industrial are 8,762 and 8,430 respectively.
Similar action has been found in the broader S&P 500 Index (SPX.X) 902.38 -0.33%, with a morning low of 891 and high of 909. My near-term resistance/support levels are 912 and 872.
The NASDAQ Composite (COMPX) 1,306 -0.74%, has not yet been able to trade in positive territory, but came within 1-point of yesterday's close.
NASDAQ Composite Chart - Daily Interval
The NASDAQ Composite (COMPX) has been having a tough time breaking above its mid-point of regression in recent months. With buying coming into treasuries today, the NASDAQ and other major market averages are having a tough time pushing above yesterday's highs. Near-term, I've got a downside alert set on the NASDAQ Composite at 1,280. In recent months, breaks lower from a rally have seen some quick drops as "technology bulls" have been quick to hit the sell button on signs of weakness.
Here's a quick look at the "Beetle's Balance Benchmark fund that we created at the close of trading on July 31st, just after the GDP data was released that day. The longer-date Treasury maturites are seeing the bulk of the buying today as depicted by the Lehman 20-year Ishares (AMEX:TLT) $84.77 +1.27%. While stocks as depicted by the DIA, SPY and QQQ have the tech-laden QQQ outperforming to the downside.
Beetle's Balanced Benchmark - From 07/31/02 close
Fixed income instruments along with the U.S. Dollar have outperformed stocks since July 31st. All columns to the right of the "#Shares" column is how a basket of each security has performed since its July 31st close. Columns to the left of "# Shares" is representative of today's action.
The recent rally in stocks may hint that the MARKET is looking for a rate cut next week. If equity bulls don't get a rate cut, then recent gains may be at risk.
Today's gains in Treasuries (lower YIELDS) hints that some money is taking a more cautious stance ahead of the Fed, but bearish equity traders are also a bit jittery as many Wall Street players are asking the Fed to cut rates in order to make fixed income investments less attractive and help bolster stock price.