* Hewlett-Packard rises as profit forecast tops estimates
* Green Mountain tumbles on U.S. accounting inquiry
* Dow down 0.3 pct, S&P off 0.3 pct, Nasdaq down 0.2 pct (Updates to afternoon, changes byline)
By Angela Moon
NEW YORK, Sept 29 (Reuters) - Wall Street took a pause from a month-long rally on Wednesday as investors grappled with mixed technical signals near the end of the second-best month for stocks in a decade.
The S&P 500 rose 9 percent in September, traditionally a weak month for stocks, as investors brushed off concerns of a double-dip recession and anticipated that the Federal Reserve would take extra steps to spur economic activity.
"We had a nice rally, so we are more or less consolidating. But there are investors who are just starting to chase this month's performance," keeping the market from a significant pullback, said Steve Goldman, market strategist at Weeden & Co in Greenwich, Connecticut.
He added that investors were taking small pullbacks as an opportunity to buy stocks in sectors, such as technology, that have outperformed this month.
The Dow Jones industrial average shed 27.67 points, or 0.25 percent, to 10,830.47. The Standard & Poor's 500 Index fell 3.38 points, or 0.29 percent, to 1,144.32. The Nasdaq Composite Index dropped 5.78 points, or 0.24 percent, to 2,373.81.
The S&P 500's relative momentum index, which moves with the relation of upward and downward changes in the benchmark, rose last Friday above 70, a level that indicates an overbought condition. It currently stands at 72.2.
The S&P 500 is on track to close the quarter up more than 11 percent after falling 11.9 percent in the second quarter. If the S&P ends September up more than 9 percent, it would be the fourth month it has done so since 1990.
Hewlett-Packard Co rose 2.2 percent to $42.56 after the computer and printer maker forecast 2011 profits above estimates.
Family Dollar Stores Inc gained 2.6 percent to $44.46 after the discount retailer recorded upbeat profits and issued a bullish outlook.
On the downside, Green Mountain Coffee Roasters Inc slid 15.1 percent to $31.44 after disclosing a regulatory inquiry into its accounting practices.
Property and casualty insurer Liberty Mutual Agency Corp, set to be the largest initial public offering in the United States so far this year, postponed its $1.22 billion IPO, citing a stalled economic recovery, a volatile stock market and undervalued property and casualty insurance stock prices.
Over the past several sessions, near-term resistance for the S&P 500 appeared to build near 1,150, and a break above that could draw more investors into both equities and options, said Scott Fullman, director of derivative investment strategy at WJB Capital Group in New York.
That level is "a fair checkpoint," according to John Schlitz, chief U.S. market technician at Instinet in New York, as it corresponds to the highs hit in January. But he said there is little strong resistance for the S&P before the 1,175 area.
Despite the strong rally, options investors were still expecting higher volatility going forward.
Steve Place, a founder of InvestingWithOptions.com, said the options market currently has a very high level of skepticism about this rally, and this is being reflected in the VIX futures curve.
"Further out in the VIX futures, there is still an elevated bid as traders position themselves for a higher expectation of volatility."
VIX futures for next year are above the 30 and 31 levels.
The VIX, Wall Street's favorite gauge of investor anxiety, was up 1.5 percent at 22.94. (Reporting by Angela Moon; Additional reporting by Rodrigo Campos, Doris Frankel and Clare Baldwin; Editing by Jan Paschal)