U.S. Equities Rangebound, Is August 2012 Rally Over?
No market catalyst to go higher but stocks tread lightly.
Stocks were rangebound today as investors contemplated whether a new leg of the 40 plus month rally will continue. The Dow Jones Industrial Average rose to 13,175.64 up 7.04 posting a gain of 0.05 percent, the NASDAQ fell-4.61 or -.15 percent to close at 3,011.25 while the S&P 500 ended the day at 1,402.22 gaining 0.06% up 0.87. The mixed market signals suggest traders are waiting for a catalyst to move markets higher but any bad news from Europe could send stocks lower as no major news on the economic data front may increase sentiment.
Tech sent the first signals that the market could be in for some short-term downward pressure but the rest of the market barely budged. Small cap stocks are not participating in this phase of the rally which could also be a sign of more rangebound trading to come. This site was the first to call a sharp downward move in the 20 year bond. The TLT, 20 Year Barclays Bond Exchange traded fund hit new lows today and confirms our assessment that the long term rally in stocks could continue after rangebound trading this week. A drop in stocks would be a buying opportunity judging from the activity in bonds that shows investor appetites for risk is increasing. Some traders may not want to chase performance so a short term fall in prices would likely lift the overall market to new multi-year highs.