Below is a brief recap on each of the top-volume, news-driven movers in Monday'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 Tuesday's pre-market and early regular session.
Netflix (NASDAQ:NFLX) plummeted 26.8% to 86.98 in Monday's after hours trading after reporting disappointing subscriber numbers and setting its Q4 guidance well below Street estimates. NFLX touched an early evening high of 124.99 before diving through the 99.52 mark to levels tight to 93. Sell momentum picked up sharply into the mid-session, driving NFLX to a session low at 85. The stock steadied in the red between 88 and 85.31 through the second-half of night play. Evening indications would suggest NFLX records a potential pre-market open Tuesday near 88 to 86. NFLX has demonstrated a consistent tendency of adding to its earnings-driven after hours direction in the following regular session on the heels of gains and declines. NFLX is showing a long-term tendency to widen its post-earnings share move between the sessions, doing so in 21 of the last 31 quarters for which we've tracked results (68% of the time). The near-term performance favors widening, seeing more-aggressive, same-direction trade in the following regular session in six of the last seven quarters. Looking deeper into the performance data, NFLX has recorded an after hours decline in 17 quarters, adding to its evening declines in next-day trade in 13 quarters (72% of the time). With a strong widening pattern in place, both historically and following earnings-driven evening declines, we would look to play an aggressive short on NFLX shares Tuesday. Early shorts may want to target potential entry points at 95 to 88, a potential near-term ceiling level that could see downside drift back into the mid- to lower-80s.
Fortinet (NASDAQ:FTNT) surged 9.8% at 21 in Monday's evening action on the back of better-than-expected Q3 results. FTNT firmed from 19.12 to a first-half after hours high of 21.74. It dropped back to about 20.40 before steadying between 20.60 and 21.30. A pre-market open Tuesday looks to have potential surrounding the 21 level. FTNT has recorded an earnings-driven after hours decline in three of the last four quarters tracked in our database. Also, 100.0% of the time (3 out of 3 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 11.3% (in 3 events) from the effective close. We would look to follow the strong near-term historical data on the upside and play FTNT long. Buyers may want to target possible upside entry points at 20.40 to 20.75, an area where buy liquidity was aggressive Monday night before the stock firmed to the 21 and above level.
Unisys (NYSE:UIS) jumped 17.1% at 23.46 in Monday's evening session after beating Q3 estimates. UIS popped through the 21 mark to hold a plus-side range of 22.50 to a high of 23.95 through the bulk of its night trade. A pre-market open Tuesday is likely seen near 23.34 to 23.80. UIS has seen an earnings-driven after hours gain in six of the last 11 quarters tracked in our database. Also, 83.3% of the time (5 out of 6 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 9.4% (in 5 events) from the effective close. The bullish historical performance, combined with some solid support seen in Monday's after hours session, would have us looking at a possible long play in UIS Tuesday. Longs may want to target possible entry points near 22.85 to 23.35, a potential near-term base support that could see upside turns back toward 23.50 or above.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.