US STOCKS-Wall Street extends year-end rally as mergers help

* Outlook from Adobe Systems tops Wall Street expectations

* Alpha Natural Resources bids for Massey Energy-report

* DSM to buy Martek Biosciences for $1.1 billion

* Dow up 0.27 pct, S&P up 0.35 pct, Nasdaq up 0.37 pct

* For up-to-the-minute market news see [STXNEWS/US]
(Updates to open)

By Edward Krudy

NEW YORK, Dec 21 (BestGrowthStock) – U.S. stocks (Read more about the stock market today. ) rose on Tuesday as
earnings and mergers supported a steady upward trend in the
equity market that investors say has further to run.

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.

Marc Pado, U.S. market strategist at Cantor Fitzgerald & Co
in San Francisco, said fund managers are reallocating money to
equities from fixed income investments and reducing cash
positions in anticipation of fresh money coming into equities
next month.

“You get to this point toward the end of the year and
performance and positioning are very key to fund managers,” he
said. “Over the last month you saw an asset allocation shift.”

Adobe Systems Inc (ADBE.O: ) surged 6.5 percent to $31.73
after it forecast earnings sharply above Wall Street’s
projections, contrasting with a pessimistic outlook three
months ago.

Alpha Natural Resources Inc (ANR.N: ) made an offer for
rival U.S. coal miner Massey Energy Co (MEE.N: ), the Wall Street
Journal reported, citing members of Massey Energy’s board.
Massey shares rose 1.5 percent to $52.58 and Alpha Natural
climbed 1.4 percent to $54.34.

The Dow Jones industrial average (.DJI: ) gained 31.53
points, or 0.27 percent, to 11,509.66. The Standard & Poor’s
500 (.SPX: ) rose 4.31 points, or 0.35 percent, to 1,251.39. The
Nasdaq Composite (.IXIC: ) added 9.69 points, or 0.37 percent, to
2,659.25.

NEXT STOP: HIGHER

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.

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 works 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 and is closely watched by traders.

Dutch group DSM (DSMN.AS: ), the world’s largest vitamins
maker, is buying U.S. baby food ingredients maker Martek
Biosciences Corp (MATK.O: ) for $1.1 billion, sending its shares
up 37 percent to $32.05 [ID:nLDE6BK04U]

Jabil Circuit Inc (JBL.N: ), an electronics manufacturing
services provider, gained 7.3 percent to $18.95 after its
first-quarter results topped analyst estimates, helped by
growth across segments, and forecast a robust second quarter.
[ID:nSGE6BJ0CV]

(Editing by Padraic Cassidy)

US STOCKS-Wall Street extends year-end rally as mergers help