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A mishmash of industries helped guide the key indexes higher, and the Dow Jones industrial average indicated that demand for large-cap names may still be undiminished. Meanwhile, new-issue Zayo Group (ZAYO) broke out sharply.
The specialist in leasing dark fiber and building cellphone towers shot up more than 5% to 34.77 and rallied past a 34.11 buy point in a five-month cup with handle. The base shows an example of fine institutional support at the important 200-day moving average during a test on Feb. 10.
IBM, expected to report Q1 results after the close on Tuesday, rallied more than 10% after it cleared a 164.76 saucer-with-handle entry in early December, but the stock has now faded below the 10-week line for more than five weeks. Analysts see profit flat at $2.35 a share and just rising 1% to $13.78 a share for the year.
UnitedHealth, up 1.4% to 167.18, is making its third general test of the 50-day line since January. The managed care firm broke out of a flat base at 144.58 once in October, then again on Nov. 10 in strong volume.
The Dow Jones industrial average rose 0.9%, just a nose ahead of the nearly 0.9% gain in the S&P 500. The Nasdaq composite was up almost 0.9% while the Russell 2000 gained 1.2%. Volume fell on both main exchanges, according to early data.
Top-performing industry groups included wireless telecom services, diversified operations, movies, travel booking and internet-based retail. But money-center, tobacco, car retail and computer-systems stocks also flourished, with groupwide gains of 1% or more.
The U.S. dollar wilted. Near-term U.S. crude oil futures sank more than 1% to $52.61 a barrel.
Returning to Zayo, the Boulder, Colo., member of IBD’s Computer-Networking industry group has lost money every year since 2010. But last year the net loss shrank to 31 cents a share, and Wall Street expects Zayo to earn 35 cents in 2017 and 57 cents in 2018.
Revenue jumped 28% to $1.72 billion in 2016, accelerating from a 20% gain in 2015.
The 5% buy zone in shares of Zayo following the breakout goes up to 35.82.
Elsewhere in the stock market today, Snap (SNAP) continued to slump after a promising rebound in late March gave the stock the appearance that it could work on the right side of its very first base pattern. While the market rose, Snap shares fell 1.3% to 19.93 and could close below 20 for the week for the first time since the week ended March 17.
Despite some rosy comments by some Wall Street analysts, the Snapchat operator must deal with the primary challenge of proving to investors it can in fact make money in the long haul. Analysts have cut their estimates, and the company is expected to lose 55 cents a share in 2017 and 33 cents in 2018.
These expected net losses are substantial, given that Snap has 1.16 billion shares outstanding. The float is 364 million.
Fundamentally, one critical issue is whether Snap can rein in its ballooning operating costs. Revenue jumped a magnificent 590% to $404 million in 2016, but research and development costs more than doubled to $184 million, while sales and marketing expense rocketed 357% to $124.4 million.
Full-year operating losses came to $520.4 million, up from a $382 million operating loss in 2015.
The Street sees Snap losing 20 cents a share in the first quarter of this year.
Snap’s RS Rating of 9 is meaningless because this rating is based on 12-month relative price performance. So, for now, watch to see if institutions come in and shore up support for the stock near 20. It came public March 2 at 17 a share.
Key earnings results on Tuesday include a batch of financial firms, such as Charles Schwab (SCHW) (earnings per share seen up 28% to 37 cents), Bank of America (BAC) (EPS seen up 25% to 35 cents, following an 11% drop and gains of 8% and 48% in the prior three quarters), and Goldman Sachs (GS) (EPS up 98% to $5.31).
Traders will also be eyeing data on U.S. housing starts for March on Tuesday and the Federal Reserve’s beige book survey of regional economic activity on Wednesday.