Stocks looked set to grind to fresh highs on Tuesday as corporate results and mergers supported a steady upward trend in the equity market.
U.S. stock indexes continue to make new highs after taking out key technical resistance levels. The S&P 500 has rallied nearly 6 percent this month to two-year highs, and is up around 21 percent from its lows this year.
John Brady, senior vice president at MF Global in Chicago, said he expects the market to move either slowly sideways or higher as S&P 500 futures work off an overbought condition shown in the seven-day and nine-day Relative Strength Index (RSI).
It's a grind trade higher on not a whole lot of volume, he said. A trade between 1,250 and 1,230 (in the S&P 500) seems really well contained, and any profit taking will probably be modest.
The RSI provides a measure of higher closes to lower closes over a given trading period.
Adobe Systems Inc
Alpha Natural Resources Inc
S&P 500 futures rose 6 points and were above fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures gained 48 points, while Nasdaq 100 futures rose 7 points.
The S&P 500 has gained for the last 3 weeks. The index broke through the 61.8 percent Fibonacci retracement of the 2007-2009 bear market slide earlier this month. Technicians say the next stop is the 76.4 percent retracement at 1,362.
It looks as though the Santa year-end rally continues, said Peter Cardillo, chief market economist at Avalon Partners in New York. Cardillo said earnings and mergers were supporting a technically strong market.
Dutch group DSM
Jabil Circuit Inc
Wabco Holdings Inc
European stocks were up 0.9 percent in morning trade in thin volume, with record-high copper prices helping mining stocks. Investors brushed aside Moody's warning it may downgrade Portugal's debt' rating.
(Editing by Padraic Cassidy)