Post-Earnings: 3 Stocks to Watch Before Thursday's Open

 |  Includes: NTAP, SNPS, VIAV
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 today's pre-market and early regular session.


NetApp (NASDAQ:NTAP) tumbled 11.8% at $36.71 in Wednesday's after-hours trade after the company reported weaker-than-expected results and guidance. NTAP slumped to a downside range of $38.24 to $36.39 in the immediate wake of the company's quarterly report. Sellers pushed in strong downside liquidity heading deeper into the first-half, dropping NTAP from $37 to a mid-session low of $34.89.

Moderate to heavier buy momentum rolled in heading into the second-half, goosing NTAP north from $35.09 to $37.10. A pre-market open Thursday looks to have potential near $37 to $36.50. NTAP is a mixed performer, having reversed its after-hours move the next day in 16 of the last 32 earnings events and widening its move in the other half. Over the past year, the stock has widened in three of four quarters. Looking deeper into the performance data, NTAP has recorded an earnings-driven after-hours decline in 18 of the 32 quarters we have tracked. It has reversed direction in the following regular session in 11 of those events, or 61% of the time.

NTAP's tendency to reverse direction following an earnings-driven after-hours decline, combined with some consistent upside support off Wednesday's evening low, would have us looking at playing both sides of the issue to start today. Longs may want to watch for any potential near-term floor established between $36 and $35, levels that could hold early day support and perhaps see some lift back into the $36s. On the short side, sell liquidity was most aggressive between $38 and $37, a potential ceiling level that could see drops back toward $36 to $35.

JDSU (JDSU) edged 1.8% lower to $11.48 in Wednesday's evening trade after beating on Q4 revenue, meeting on earnings, and setting its Q1 view below expectations. JDSU touched a brief early evening high of $11.95 before diving straight to its session low of $9.80. It spent most of the first-half firming from the low, rising from $10 to $11.65. The stock settled between $11.62 and $11.15 through the mid-session and second-half of after-hours action.

A pre-market open Thursday may have potential near the $11.40 to $11.20 range. JDSU is one to watch for potential next-day wider movement as the stock has seen more aggressive next-day action following 23 of its last 30 after-hours earnings events, or about 77% of the time. The stock adds to its evening trade in next-day action regardless of whether its up or down in the after-hours, offering both longs and shorts solid opportunities to play the shares.

The near-term performance favors widening, as the issue has expanded its after-hours move in next-day regular session trade in five of the last seven quarters. While we like the historical widening trend in place in JDSU we would be cautious on the short side of the shares through the early going Thursday as there was some decent buy momentum in the stock that could lift it back up near flat, or perhaps send it into the green. A tentative ceiling level did develop late Wednesday night, between $11.65 and $11.50, a range that could see downside trade back into the lower $11s.


Synopsys (NASDAQ:SNPS) advanced 3.1% to $24.17 in Wednesday's after-hours trade after the company posted better-than-expected results and guidance. SNPS leaped to an early evening high of $24.48 before sliding back to $23.43. It found firmer upside support into the late first-half and second-half of the evening, trading between $23.85 and $24.19. A pre-market open Thursday looks to have potential near the $24 level.

SNPS, over the long term, has widened its share movement 15 times and narrowed 13 times. Looking deeper into the performance data, SNPS has recorded an earning-driven after-hours gain in 12 of the quarters tracked in our database, adding to its gains in next-day action in 7 of those events, or 58% of the time.

The historical upside data isn't overwhelming in terms of supporting a long play on SNPS shares Thursday, but there was substantial buy liquidity recorded Wednesday night that would indicate some confidence in a near-term bounce. Early longs may want to target possible upside entry points near $23.80 to $24.15, a potential base support that could see lift back into the lower- to mid-$24s.

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