After Hours: Shopping for Shorts at Men's Wearhouse, Texas Instruments Worth a Long / Short Look

Includes: TLRD, TXN
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.


Men's Wearhouse (MW) edged 0.6% higher to 30.30 in Wednesday's evening session after beating Q1 expectations and setting its guidance above the Street view. MW leaped to a first-half after-hours high of 31.73, but it was quickly set upon by heavy sell liquidity that drove it south from 31.35 to an evening low of 29.15. Buyers found their footing off the bottom, grinding the shares higher into the mid-session and second-half of the after-hours and eventually holding the stock in a mostly upside range of 30 to 30.50. A pre-market open Thursday may have potential near 30.15 to 30.50. MW has recorded an earnings-driven after-hours gain in seven of the last 11 quarters tracked in our MT Pro database. Also, 100.0% of the time (7 out of 7 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 10.7% (in 7 events) from the effective close. The widening pattern in place bodes well for longs, but the selling we recorded off Wednesday's after-hours highs would initially have us looking at possible short plays on MW Thursday morning. Any return to the 31.35 to 30.94 area could set up as a potential ceiling level for shorts to eye as selling was heavy in this area Wednesday night. More risk tolerant shorts may want to eye levels closer to 30.75 to 30.50, an area that didn't get much of an upside test in late evening trade but where the stock is likely to open in morning action and perhaps run into difficulty in finding support to again take a run at upside support at 31 or above. On the long side, buyers looked most confident Wednesday night as MW firmed off its low of 29.15 up to 29.75, an area where a potential bottom support could form and perhaps see some firming back toward 30.


Texas Instruments (NYSE:TXN) declined 0.3% to 32.55 in Wednesday's after-hours trade after lowering its Q2 guidance range below the current Street consensus. TXN cratered from 32.79 to an after-hours low of 30.87 in the immediate wake of the company's mid-quarter update. Buyers pushed in some decent upside support off the low, goosing TXN north from 30.95 to as high as 32.86. It steadied tight to the 32.40 to 32.80 area through the late evening. A pre-market open Thursday may have potential in the 32.80 to 32.40 range. TXN's long-term pattern between the sessions is fixed in a reversal trend over the last eight years, cutting back or reversing its evening performance in next-day regular session trade in 16 of its last 29 quarterly updates, and widening its movement in 13 events. Looking deeper into the performance data, TXN recorded a guidance-driven after-hours decline in 18 of the 29 events we've tracked, and the stock is evenly mixed in its next-day regular session performance, narrowing its declines nine times and adding to its declines nine times as well. The mixed historical trade off after-hours declines, combined with some rather firm upside momentum recorded off tonight's lows, would have us looking to play within the shares within the ranges seen Wednesday night. Longs may have legs to catch an upside entry point at 30.90 to 32, levels where buy momentum increased significantly Wednesday night as the stock surged off its after-hours low. On the short side, a tentative ceiling level formed late Wednesday at 32.86 to 32.60, levels that could see downside weakness back into the mid- to lower-32s if the shares should hold against any upside tests Thursday morning.

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