After Hours: A Wary Long on, Shorting First Solar and MIPS Technologies

 |  Includes: FSLR, MIPS, PCLN
by: Midnight Trader

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

Upside Movers (NASDAQ:PCLN) soared 9.7% to 530.25 in Thursday's after hours trading after reporting better-than-expected results and guidance. PCLN was released from an after hours trading halt and jumped straight to its evening high of 545. It dropped back to about 526 before finding firmer footing into the second-half of night trading, holding a range of 530 to 540. A pre-market open Friday may have potential near the 530 to 540 area. PCLN demonstrates an aggressive tendency to widen its next day share movement following an extended-hours earnings release, doing so for 23 of the past 30 quarters. In the near-term, the stock is also showing that pattern, widening its share move in seven of the last eight quarters. Looking deeper into the performance data, longs should be aware that PCLN has seen a positive extended-hours earnings-driven trade in 19 of the 30 quarters we've tracked, and in 16 of those upside extended-hours moves the stock has followed that trade with a more aggressive positive run in the next day's regular session, or 84% of the time. The solid long-term widening trend in place, combined with a consistent widening performance on the upside, bodes well for the long side on Friday. Our one note of caution would be the substantial sell liquidity that hit the issue Thursday night at 540 and above, an area where a potential near-term ceiling level could develop. On the long side, buyers may want to watch for any drops back into the 520 to 526 area, a potential floor support that could see bumps back into the 530s. More risk tolerant longs may want to sit closer to 530 to 535 if the stock opens early trade here, an indication it could attempt to run to fresh near-term highs to start the day.

Downside Movers

First Solar (NASDAQ:FSLR) declined 2.8% at 104.85 in Thursday's after hours trading after reporting disappointing Q2 results and in-line guidance. FSLR tumbled to an early after hours low of 97.08 before rebounding to hold a still negative range of 106 to 103, an area it held through the bulk of its evening action. A pre-market open Friday may have potential near the 104 to 105 range. FSLR has recorded an earnings-driven after hours decline in eight of the last 11 quarters tracked in our database. Also, 87.5% of the time (seven out of eight 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 3.9% (in seven events) from the "effective close." FSLR's consistent tendency to add to evening declines in next-day action would have us looking at a potential short play in the shares on Friday. Early shorts may want to sit close to the 101 to 105 level, a possible near-term ceiling that could see drops back into the 104 to 102 range, or lower.

MIPS Technologies (NASDAQ:MIPS) declined 27% to 4.45 in Thursday's evening trading after reporting Q4 results that missed Street estimates. MIPS dropped to negative levels between 5.72 and 5.30 through the first half of night trading. It weakened considerably into the second-half, trading between 4.91 and a low of 4.35. A pre-market open Friday may have potential in the 4.80 to 4.45 range. Sellers were most aggressive Thursday night between 5.40 and 4.80, a wide range for the short side, but where we suspect a top could form through the early-going on Friday.

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