Seeking Alpha
Profile| Send Message|
( followers)

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.

UPSIDE MOVERS

Texas Instruments (NASDAQ:TXN) advanced 3.6% to 34.41 in Monday's after hours trading after topping Q4 revenue expectations. TXN dropped to a brief first-hours after hours low of 32.48 before setting off on an upside run that took it from 32.49 to a late high of 34.70. It spent the bulk of its late evening trade north of 34. A pre-market open Tuesday may have legs near 34.15 to 34.50. We noted earlier today that TXN consistently favors the short play off its earnings report so a decline or gain in the after hours session following the company's Q4 report offers opportunities for traders willing to test the history. TXN has recorded an earnings-driven after hours gain in 16 of the quarters we've tracked, reversing direction the following day in 10 of those quarters, or 63% of the time. Despite the historical trend in place we're inclined to follow the ranges seen Monday night as buying was confident near the highs. Early buyers may want to linger near the 34 to 34.30 area to start, a base level that could hold as a floor support as the stock perhaps makes another run at the highs near 34.50, or above. More risk tolerant longs may want to sit closer to the 34.40 to 34.50 area, levels that saw late evening buying and where a tentative near-term floor support could form for moves to fresh highs early Tuesday. On the short side, the 34.70 to 34.50 area proved to be a tough late evening ceiling, an area that could see downside drift back toward the lower-34s.

VMware (NYSE:VMW) gained 4.6% to 90 in Monday's after hours on the back of better-than-expected Q4 results and in-line guidance. VMW spiked to plus-side levels between 88 and a high of 91 and stayed in this area through Monday's after hours session. A pre-market open Tuesday may have potential near 90 to 91. VMW does not regularly follow-up gains or losses in the next day's session with heftier same-direction trade. Instead, it tends to pull off sharp reversals. Over the handful of earnings reports we've tracked, the stock favors reversing direction between the sessions. It has narrowed 11 times and in six quarters has widened its evening share move during the next day's session. Near-term, the stock has reversed direction in three of four quarters. Looking deeper into data, the issue has followed up evening earnings with a gain 10 times, but longs take note: the stock extended that move only three times. The stock's tendency to narrow evening gains, combined with some consistent selling recorded in Monday's after-hours would have us looking at a potential short play on the shares Tuesday morning. Shorts may want to eye the 91 level as a potential top, an area that could see downside drift back below 90. On the long side, buyers looked most confident early in Monday's after hours between 86 and 88, a potential base support that could see upside turns back toward 89 or 90.

Polycom (NASDAQ:PLCM) firmed 14.9% at 21.17 in Monday's evening trade after blowing past Q4 estimates. PLCM popped to an early after hours high of 20.80 before settling between 19.50 and 20.58 through much of the session. It spiked to fresh highs late in the session at 21.29. A pre-market open Tuesday may have potential near the 20.80 to 21.30 area. PLCM has recorded an earnings-driven after hours gain in four of the last nine quarters tracked in our database. Also, 75.0% of the time (three out of four 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 7.2% (in three events) from the effective close. The widening trend in place, combined with aggressive late evening buy action in the shares, would have us looking at a long play on the stock Tuesday. Buyers may want to target entry points at 20.75 to 21, a range that could see bumps back toward the highs of 21.29, or perhaps a fresh near-term top deeper into the 21s.

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

Source: After Hours: Pegging Texas Instruments And Polycom Long, Short VMware

Check out Seeking Alpha’s new Earnings Center »