Below is a brief recap on each of the top-volume, news-driven movers in Tuesday'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 Wednesday's pre-market and early regular session.
Apple (AAPL) surged 7.9% at 453.75 in Tuesday's after hours session after blowing past Q1 expectations and setting mixed guidance for Q2. AAPL was released from an after hours trading halt and spiked to a high of 468.85. It dropped back to maintain gains between 449.85 and 460.63 through the bulk of evening action. A pre-market open Wednesday may have potential in the 450 to 460 area. We noted earlier today that AAPL doesn't offer longs a glowing history of post-earnings gains in the immediate wake of the company's quarterly results. Longs have seen their earnings-driven after hours gains narrow the next day in nearly 60% of the events we've tracked. AAPL has recorded an earnings-driven after hours gain in 23 of the 33 quarters tracked in our database. The stock added to its after hours upside in next-day action nine times, reversed direction 13 times - or about 57% of the time - and once remained even with its after hours move. We're inclined to follow the narrowing pattern in AAPL shares and play the short side on the shares Wednesday morning. AAPL now sits at a fresh 52-week high with its upside move tonight, and we saw significant sell pressure come into the shares at 460 down to 455. This may offer a potential near-term ceiling level for shorts to eye, but we would be overly cautious and perhaps stick to the sidelines through the early going Wednesday. We would expect aggressive upside liquidity to flow into the shares to start on Wednesday, especially with what is likely to be some glowing analyst commentary hitting the shares. Nonetheless, the top that developed at 460 to 455 is worth watching and may make for a potential short entry point if it holds against the initial upside runs early Wednesday.
CA Technologies (CA) charged 15.7% higher at 26.40 in Tuesday's after hours on the back of a jump in revenue and a hefty increase in the company's quarterly dividend. CA recorded strong upside support through the first-half of after-hours action, rising from 24 to a high of 28. It weakened steadily through the mid-session and second-half, edging down from 27.57 to 26.17. A pre-bell open Wednesday may have potential surrounding the 26.50 area. CA has recorded an earnings-driven after hours gain in three of the last five quarters tracked in our database. Also, 66.7% of the time (two out of three 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 1.6% (in two events) from the effective close. The reversal history off upside moves isn't overwhelming, but we're keyed into the sharp selling in the shares at 28 to 27.45, a potential near-term ceiling level that may offer some opportunities for more risk tolerant shorts.
AMD (AMD) declined 1.5% to 6.43 in Tuesday's evening trade after reporting mixed Q4 results. AMD was volatile at the start of night trading, swinging between a high of 6.80 and a low of 6.25. It settled between 6.49 and 6.30 through the bulk of evening action. A pre-market open Wednesday may have potential surrounding the 6.40 to 6.35 levels. In the 14 quarters we've tracked where AMD has recorded an evening decline, it added to that downside move during the following day's trading session 10 times, or 71% of the time. AMD spent much of its after hours trade pinned in the red, and with a history of adding to evening downside moves in next-day action, we would play the short side on the shares. A potential ceiling developed tonight at 6.49 to 6.45, a prospective near-term top that could see negative drift back into the lower 6.40s, or below.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.