After Hours: Playing Qualcomm, JDSU And Green Mountain Coffee Long Off Earnings

Includes: GMCR, QCOM, VIAV
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.


Qualcomm (NASDAQ:QCOM) advanced 4.5% to 62.25 in Wednesday's after hours trading after reporting better-than-expected results and guidance. QCOM jumped to plus-side levels between 62.12 and a high of 63.40 through the first-half of after hours trade. Sellers hit the issue hard off the 63-and-up levels into the second-half, dropping QCOM to still positive levels between 62.09 and 62.56. A pre-market open Thursday looks to have potential in the 62 to 62.50 range. Qualcomm has historically rewarded longs in its post-earnings share performance immediately following the release of the company's quarterly results. The stock has consistently added to earnings-driven evening gains in next-day trade while on the other side it has cut back or reversed its after hours declines the following day. QCOM has recorded an after hours gain in 16 of the quarters we've tracked, widening its direction (adding to its after hours gains in next-day regular session trade), in nine quarters (56% of the time). The plus-side pattern is not overwhelming, but decent. The mid-session selling off 63 gives us some pause in terms of getting in too high so we would look to play the issue on the long side near 62 to 62.30, levels that could form as a near-term floor and perhaps catch some lift into the higher-62s.

JDSU (JDSU) advanced 6.6% to 14 in Wednesday's evening action after beating Q2 estimates and setting Q3 revenue guidance in a range that straddled the Street view. JDSU firmed through the 13.73 level to an early after hours high of 14.67. Sellers were aggressive off the top, driving JDSU down as low as 13.53 before it steadied between 13.54 and 14.13. A pre-market open Thursday may have potential near 13.85 to 14.25. We noted earlier Wednesday that JDSU is one to watch for potential next-day wider movement as the stock has seen more aggressive next-day action following 25 of its last 32 after-hours earnings events, or about 78% of the time. The stock adds to its evening trade in next-day action regardless of whether it's up or down in the after hours, offering both longs and shorts solid opportunities to play the shares. The near-term performance favors widening, as the issue has expanded its after hours move in next-day regular session trading n seven of the last nine quarters. The strong widening trends in place are tough to ignore, but we would issue one note of caution for longs as the stock potentially revisits trading at 14.25 and above Thursday. This was a level that saw significant sell momentum and may set up as a tough ceiling to break. Longs may want to watch for potential entry points at 13.50 to 13.75, a range that could set up as a possible bottom and perhaps see some lift back toward 14.

Green Mountain Coffee (NASDAQ:GMCR) surged 18.4% to 63.50 in Wednesday's evening action after blowing past Q1 earnings estimates. GMCR jumped to 56.85 at the start of night trading and set off on an upside run that took it from 58 to a late high of 63.95. A pre-market open Thursday may have potential tight to the 62 to 63.50 area. GMCR has recorded an earnings-driven gain in six of the last 10 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 12.6% (in three events) from the effective close. The next-day performance is mixed, but when GMCR sees next-day outperformance the gains can be heady. With that as a backdrop we would look to play the long side in the shares, targeting upside entry points between 59 and 61, a base support that could set up as a potential bottom for catching moves back toward 62. It's likely GMCR records early Thursday trading closer to 62 or 63 so more risk-tolerant longs may want to tweak the entry closer to 62 to 63.50 in anticipation of this range seeing bumps back toward Wednesday's after hours top of 63.95, or higher.

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