Akamai: Time to Ride That Red Ball Express, Heading South

| About: Akamai Technologies, (AKAM)

Akamai Technologies (NASDAQ:AKAM) has seen its earnings-driven after-hours declines head deeper into the red in the following day's regular session in 75% of the quarters where the stock has recorded an evening downside move.

With the stock down 11% at 42.70 in Wednesday's after-hours trade, we're inclined to jump on that red ball express and go along for the ride.

AKAM beat Q4 estimates but also issued Q1 guidance below Street expectations.

AKAM saw moderate downside trading in the early after-hours, sitting near negative levels between 47.55 and 46.50. More aggressive selling hit the issue into the mid-session in the wake of the company's weak guidance, dropping the shares from 46.97 to an evening low of 42.25. It settled near 42.90 to 42.35 into the second-half of the night trade.

A pre-market open Thursday may have potential in the 43 to 42.50 area.

AKAM has recorded more aggressive next-day closing levels following 21 of its last 28 after-hours earnings events. In the near term, the stock is mixed, however, with two narrowing and two wider moves.

Looking deeper into performance data, AKAM has reacted to evening reports with declines in 12 quarters, extending downside action the following day nine times, or 75% of the time.

The longer-term widening trend in place, combined with some solid performance on the downside, would have us looking at a short play on AKAM Thursday. Shorts may want to target potential entry points in the 44 to 43 area as this range held as a top through the mid-session and early second-half of evening trade.

More risk tolerant shorts may want to bring the entry down closer to 43 to 42.70 in anticipation of the stock starting the day closer to these levels and perhaps again dropping back into the mid- to lower-42s.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.