* Caterpillar shares up as dealer sales accelerate
* Brocade, Intuit rise after posting results
* Indexes up: Dow 0.59 pct, S&P 0.19 pct, Nasdaq 0.08 pct
* For up-to-the-minute market news see [STXNEWS/US] (Updates to close)
By Rodrigo Campos
NEW YORK, Feb 18 (Reuters) - Late arrivals to the speediest rally in stocks since the Great Depression pushed stocks higher for a third week on Friday, despite growing signals of an overheating market.
More than $8 billion flowed into U.S. equity funds for the week ended Feb. 16, according to Thomson Reuters Lipper data. Analysts said investors appear reluctant to sell despite slack volume and a narrowing spread between winners and losers.
“We’ve had one of the most impressive rallies in recent memory, but the fact is any dip is met with substantial buying power,” said Ryan Detrick, chief technical strategist at Schaeffer’s Investment Research in Cincinnati.
About 7.2 billion shares traded on the New York Stock Exchange, NYSE Amex and Nasdaq, far below last year’s estimated daily average of 8.47 billion. But some point to a lack of sellers as the reason relatively few shares are changing hands.
“Volume hasn’t been normal for a bull market,” Detrick said. “The retail crowd has missed a good chunk of this rally.”
For most of 2010, retail investors put net cash into mutual funds that invest in fixed-income securities. But with more signs the U.S. economic recovery is strengthening and U.S. equity indexes rising, investors have found renewed appetite for stocks.
Investors poured a net $8.72 billion into U.S. equity funds for the week ended Wednesday, up from $2.04 billion in the prior week, according to Lipper data.
On Friday the Dow Jones industrial average .DJI gained 73.11 points, or 0.59 percent, to 12,391.25. The Standard & Poor's 500 Index .SPX added 2.58 points, or 0.19 percent, to 1,343.01. The Nasdaq Composite Index .IXIC edged up 2.37 points, or 0.08 percent, to 2,833.95.
Advancing stocks outnumbered declining ones on the NYSE by a ratio of more than 4 to 3. On the Nasdaq, 1,345 advancers outweighed 1,283 falling stocks.
For the week, the Dow and the S&P 500 gained 1 percent, and the Nasdaq added 0.9 percent.
Caterpillar Inc (CAT.N) helped lift the Dow industrials, rising 2.4 percent to $105.86 after the equipment maker said machinery sales through dealers accelerated in the three months through January.
With some technical measures pointing to signs of an overbought market, some investors have been braced for a pullback. But the market has for weeks defied those expectations.
“We have a pretty long list of warning signals, but a warning signal is not a sell signal,” said John Kosar, director of research at Asbury Research LLC in Chicago.
“Our bias has been positive since the beginning of December despite all these red lights blinking all over the place.”
Individual names were on the move on response to the latest batch of earnings reports.
Brocade Communications Systems Inc BRCD.O topped estimates and forecast second-quarter profit above Wall Street’s expectations, pushing its shares up 6 percent to $6.38.
Intuit Inc (INTU.O), the maker of TurboTax and QuickBooks accounting software, reported late Thursday a profit that beat Wall Street expectations and raised its quarterly earnings forecast, sending its shares up 7.3 percent to $54.11.
U.S. markets will be closed on Monday for the Presidents Day holiday. (Reporting by Rodrigo Campos, additional reporting by Jennifer Ablan; Editing by Padraic Cassidy)