After Hours: Pegging Thursday Trades On Applied Materials, Guess? and TiVo

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 |  Includes: AMAT, GES, TIVO
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.

Downside Movers

Applied Materials (NASDAQ:AMAT) declined 4.3% at 10.87 in Wednesday's after hours trading after beating Q3 estimates but also guiding for a sharp sequential drop in Q4 sales. AMAT cratered to an early after hours low of 10.51 before firming to still negative levels between 11.09 and 10.70 - a range where it stayed through the first-half of night trade. It weakened into the second-half, trading between 10.92 and 10.65. A pre-market open Thursday may have potential in the 10.90 to 10.80 area. AMAT has a tendency to reverse its after hours movement the next day following an evening earnings event. It has done so after 18 of the last 29 earnings events. Looking deeper into the performance data, AMAT has recorded an after hours decline in 14 of the 29 quarters we've tracked, cutting back or reversing its decline eight times, 57% of the time. The broader reversal pattern in place on AMAT would give us some pause on the short side of the shares for Thursday, but considering some steady downside pressure that clung to the stock Wednesday we would be looking short through the early-going. Morning shorts may want to target possible entry points near 11.10 to 11, a potential near-term ceiling level that could see drops back into the high-10s. On the long side, buyers established a tentative floor support late Wednesday night at 10.70 to 10.80, an area longs may want to eye for some quick turns back toward 10.90 or above.

Guess? (NYSE:GES) declined 4.5% at 31.80 in Wednesday's evening trading after beating Q2 estimates but also setting its outlook below the Street view. GES slumped to an early evening low of 30.13 before spiking to a high of 33.41. It was quick to give up the modest gains, settling between 32.25 and 31.25 through the bulk of its after hours action. A pre-market open Thursday may have potential in the 32 to 31.60 area. In the last three years of performance data we have tracked, the stock has added to its earnings-driven extended-hours trading in next-day regular session action in eight of the last 12 quarters. Looking deeper into the performance data, GES has seen four earnings-driven after hours declines, and it is evenly split in its next-day action, adding to its negative trade twice and two times narrowing or reversing its downside move. With limited downside data in place, we would look to play a cautious short in GES Thursday morning. The stock developed a consistent ceiling Wednesday night at 32.25 to 32 - an area that could have some legs to see some weakness back into the high- to mid-31s.

Upside Movers

TiVo (NASDAQ:TIVO) advanced 8.3% at 8.80 in Wednesday's after hours trading after posting better-than-expected Q2 results and announcing a stock buyback. TIVO surged from 8.20 to a high of 8.99 early in the first-half of night trading. It settled between 8.60 and 8.85 through the rest of the evening. A pre-market open Thursday may have potential near 8.60 to 8.80. TIVO has recorded an earnings-driven after-hours gain in six of the last nine quarters tracked in our database. Also, 66.7% of the time (four out of six times) the stock reversed in the opposite direction by the close of the next day's regular session compared to the extended hours "effective close." When it reversed, the price closed in the opposite direction on average by 5.9% (in four events) from the effective close. The reversal trend in place off earnings-driven gains may open the door for shorts to play the shares, but we'd be inclined to follow the long side early on Thursday. Morning longs may want to target potential upside entry points near 8.60 to 8.70, levels that could see lift back into the higher 8s. TIVO failed to crack the 9.00 level Wednesday night so shorts may want to shift to the sidelines at the start tomorrow, and if a firmer top does develop in the high-8s or low-9s then there may be room to test the downside from this area.

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