After Hours: Going Long on Whole Foods, Shorting Akamai, Citrix and TriQuint

 |  Includes: AKAM, CTXS, QRVO, WFM
by: Midnight Trader

Below is a brief recap on each of the top-volume, news-driven movers in Wednesday'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 Thursday's pre-market and early regular session.

Upside Movers

Whole Foods Market (NASDAQ:WFM) gained 3.2% at 67.60 in Wednesday's evening trading after topping Q3 earnings estimates. WFM jumped to plus-side levels between 65.50 and 67.50 through the first-half of night trade. It strengthened into the second-half, maintaining gains between 67.05 and a high of 68.40. A pre-market open Thursday may have potential surrounding the 67.50 to 68 area. WFM has developed a steady pattern of widening price moves between the sessions following its after hours earnings-related events, extending its move after 21 of its past 28 earnings-related events. In the near-term, the pattern favors widening as well, doing so in six of the last seven quarters. Looking deeper into the performance data, WFM has recorded an after hours earnings-driven gain in 17 of the 28 quarters we've tracked. It has seen its gain move higher the following day in 12 of those quarters (71% of the time). The breadth of historical data bodes well for the long side of WFM in Thursday's trading. We would look at potential plus-side entry points between 66.16 and 67, levels where buy liquidity was aggressive through the first-half of after hours trading. More risk tolerant longs may want to tweak the upside north toward 67 to 67.75 as it's likely the issue starts the day either within this range or just above it, and perhaps uses it as a base support to make another run at 68.

Downside Movers

Akamai (NASDAQ:AKAM) cratered 13.7% at 25.48 in Wednesday's after hours trading after missing Q2 expectations. AKAM touched a brief early after hours high of 30.69 before dropping back to hold a negative range of 28.58 to 26.80. The stock weakened into the mid-session and second-half, dropping from 27.85 to hold a downside range of 26.50 to 25.41. Evening indications would suggest AKAM records a potential pre-market open Thursday near 26 to 25.50. AKAM has recorded more aggressive next-day closing levels following 23 of its last 30 after hours earnings events. Looking deeper into performance data, AKAM has reacted to evening reports with declines in 14 quarters, extending downside action the following day 11 times, or 79% of the time. The broader historical widening trend, combined with the data on downside moves, would have us looking at a short play on AKAM Thursday. Shorts may want to target possible entry points in the 27.50 to 26.50 area, levels where negative liquidity was aggressive before the issue dropped to its late lows. More risk tolerant shorts may want to sit closer to the 26 to 25.50 area as it's likely the stock starts the day closer to this area and perhaps seeks out fresh lows deeper into the 25s.

Citrix Systems (NASDAQ:CTXS) was punched 4.5% lower at 67.81 in Wednesday's after hours session on the back of better-than-expected Q2 results and mixed guidance. CTXS slumped to downside levels between 68.50 and 66 through the first-half of evening trading. It moved lower into the second-half, trading between 67.88 and a bottom of 65.20. A pre-market open Thursday may have potential near the 68 to 67 area. CTXS is mixed in its performance between the sessions, adding to its earnings-driven after hours trade in next-day action in 13 events and reversing direction in 13 events over the last 26 quarters. Looking deeper into the performance data, CTXS has recorded an earnings-driven after hours decline in 12 of the 26 quarters tracked, reversing direction in seven of those quarters, or 58% of the time. The historical data doesn't offer strong support for the short side of CTXS on Thursday, but consistent sell pressure seen Wednesday night between 68.50 and 67.60 could open the door for shorts to test the waters in this area for riding potential weakness back into the 66 to 65 area.

TriQuint Semiconductor (TQNT) was hammered deep into the red Wednesday night, down 19.3% at 8.23, after posting weaker-than-expected Q2 revenue and a disappointing outlook. TQNT hit an early after hours high of 10.63 before sliding down to levels between 9.20 and 8.45. It weakened further into the mid-session and second-half of night trading, holding a negative range of 8.45 to a low of 8.18. A pre-bell open Thursday may have potential in the 8.50 to 8.20 range. TQNT has recorded an earnings-driven after hours decline in 5 of the last 8 quarters tracked in our database. Also, 60.0% of the time (3 out of 5 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 4.0% (in 3 events) from the "effective close." We would look to play the short side of TQNT based on its widening history following downside moves, but we would be cautious early Thursday as a potential floor support was established tonight at 8.18 up to 8.35, levels where buying was heavy. Shorts may want to watch for any return to the 8.90 to 8.50 area, a range where sell momentum was most aggressive through the first-half of evening action and suggested a potential near-term ceiling level.

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