Below is a brief recap on each of the top-volume, news-driven movers in Monday's after-hours, taking a look at specific stocks' after hours movement and how that trade may offer insight into potential floor supports, ceilings and trading ranges that could develop in Tuesday's pre-market and early regular session.
IBM (NYSE:IBM) edged up 1.7% to 178.47 in Monday's evening trading after reporting better-than-expected Q2 results and raising its guidance. IBM dropped to a brief early after-hours low of 170.63 before steadying near 175 to 174 prior to the company's quarterly results. It shot to a session high of 179.74 in the immediate wake of its report before holding an upside range of 178.05 to 179.66 through the bulk of its night trade (a fresh 52-week high if the gains hold into Tuesday). A pre-bell open Tuesday looks to have legs near 178 to 179. IBM favors a long-term reversal pattern in its session-to-session performance, crossing narrower next-day percentage closing levels following after-hours earnings events in 16 of the last 28 quarters. In the near-term, the stock has maintained that tendency, trimming its move in three of the most recent four quarters.
Looking deeper into the performance data, we noted earlier today that longs may want to be wary of any upside moves IBM may record in this evening's trade. The stock has posted an earnings-driven after-hours gain in 15 of the 28 quarters we've tracked, and in nine of those quarters, 60% of the time, the stock has seen its after-hours gain reverse or narrow in next-day regular session trade. IBM's tendency to reverse its after-hours gains, combined with some consistent selling recorded at tonight's highs would have us looking at a potential short play in the shares on Tuesday. More risk tolerant shorts may want to eye possible entry points near 179.66 to 178.80, levels that stood as a firm top through the second-half of Monday's after-hours trade.
Wynn Resorts (NASDAQ:WYNN) was up 2.4% at 168.90 in Monday's after-hours trading after topping Q2 expectations. WYNN spiked to an early after-hours high of 170.71 before dropping back to about the 165 mark. It found steady support deeper into the evening, trading up to plus-side levels between 166.95 and 169.33. After-hours indications would suggest WYNN records a potential pre-market open Tuesday near 168 to 169. WYNN has recorded an earnings-driven after-hours gain in six of the last 12 quarters tracked in our database. Also, 66.7% of the time (four out of six times) the stock followed-through in the same direction by the close of the next day's regular session compared to the extended hours "effective close." When it followed-through, the price closed further in the same direction on average by 5.2% (in four events) from the effective close. WYNN has a solid performance history on the back of after-hours upside moves so we would look to play the long side of the shares through the early hours on Tuesday. Morning longs may want to target possible entry points near 166 to 168, levels that could form as a potential floor and perhaps catch some upside turns back toward 169 or higher. One note of caution: with Monday night's bounce higher, WYNN is holding a fresh 52-week high and could be ripe for some profit-taking Tuesday, perhaps opening the door for shorts to watch whether a ceiling forms in the high 160s or low 170s, and perhaps offer an opportunity to take advantage of a downside bet from here.
Mosaic Co. (NYSE:MOS) advanced 1.5% at 67.45 in after-hours trade after beating Q4 Street estimates. MOS was a volatile mover through the early after-hours, swinging from a low of 65.36 to a high of 68.47. It found firmer footing through the late first-half and second-half of the evening, trading between 66.62 and 67.64. A pre-market open Tuesday may have potential near 67.25 to 67.50. MOS has recorded an earnings-driven after-hours gain in four of the last 11 quarters tracked in our database. Also, 75.0% of the time (three out of four times) the stock followed-through in the same direction by the close of the next day's regular session compared to the extended hours effective close. When it followed-through, the price closed further in the same direction on average by 4.6% (in three events) from the effective close. With some decent historical data in place on the plus-side, combined with steady buy support recorded Monday night, we would look to target a long play in the shares Tuesday morning. Longs may want to target possible entry points at 66.62 up to 67.25, a range that held firm as a floor support through the bulk of night trade and where there may be room to catch upside turns back into the mid- to higher-67s.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.