After Hours: Long On Ulta, Shorting Texas Instruments And VeriSign

Includes: TXN, ULTA, VRSN
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.


Ulta Beauty (NASDAQ:ULTA) advanced 2% to 61 in Thursday's after hours trading after posting better-than-expected results and guidance. ULTA was a volatile mover at the start of night trading, swinging between a high of 62 and a low of 58.26. Buyers found firmer footing through the late first-half and second-half, driving the shares north from 59.59 to as high as 61.65. It settled near 60.57 to 61.47 deeper into the evening. A pre-bell open Friday may have potential near 60.50 to 61. ULTA has recorded an earnings-driven after hours gain in all of the last six quarters tracked in our database. Also, 50.0% of the time (three 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 10.6% (in three events) from the effective close. While the historical data on the long side is mixed, the stock's tendency to add significant upside in next-day action in the events where it does head wider would have us looking at a potential long play on the shares. Longs may want to target possible entry points at 60.20 to 61, a possible floor support that could see turns north toward the 61.50 area.


Texas Instruments (NYSE:TXN) edged 1.2% lower to 25.48 in Thursday's evening action after cutting its Q3 revenue guidance below its previous view and Street estimates. TXN cratered to a first-half after hours low of 24.76 but was quick to bounce back through the 25.40 level to as high as 26.01. Sellers pressured the issue late, pushing it south from 25.88 to 25.44. A pre-market open Friday may have potential near 25.60 to 25.40. Following mid-quarter updates between 2011 and 2004, TXN's performance between the sessions is fixed in a reversal pattern, with TXN cutting back or reversing its evening performance in next-day regular session trade in 17 of its last 30 quarterly updates, and widening its movement in 13 events. Looking deeper into the performance data, TXN recorded a guidance-driven after hours decline in 19 of the 30 events we've tracked, and the stock is about evenly mixed in its next-day regular session performance, narrowing its declines 10 times and adding to its declines nine times as well. With a mixed batch of historical data on the downside we would look to play the ranges recorded in TXN Thursday night, initially pegging a short play on the shares. Shorts may want to eye the 26 to 25.70 range to start, levels that set up as a tentative ceiling area in night trading and where there may be room to catch some weakness back into the mid- to lower-25s.

VeriSign (NASDAQ:VRSN) slumped 8.5% at 31 in Thursday's after hours trading after announcing the resignation of its CFO. VRSN dropped to an early after hours low of 29.17 before recovering to hold a negative range of 31.43 to 30.37 - levels it held through the bulk of night trading. A pre-market open Friday looks to have legs surrounding the 31 mark. Sellers were most aggressive Thursday night at 31.43 to 31.26, a potential near-term ceiling level for shorts to watch.

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