Long Or Short: Trading Pandora, Krispy Kreme And OmniVision On Friday

Includes: KKD, OVTI, P
by: Midnight Trader

Below is a brief recap on each of the top-volume, news-driven movers in Thursday'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 Friday's pre-market and early regular session.


Pandora (NYSE:P) advanced 3% to 12.85 in Thursday's after hours trading after topping Q2 expectations. Pandora vaulted to an early after hours high of 14.99 before setting off on a first-half slide from 14.88 to a low of 12.65. It steadied near 13 to 12.65 into the mid-session and second half of evening play. A pre-market open Friday may have potential near the 12.75 to 13 area. Despite the upside move in Pandora shares, sellers flocked to the issue at levels above 13.25, an area shorts may want to eye through the early-going Friday. Downside liquidity remained aggressive between 13.25 and 13 heading into the second-half of night play, a secondary potential ceiling level for more risk tolerant shorts to watch.

Krispy Kreme Doughnuts (KKD) firmed 3.2% to 8.10 in Thursday's evening trading after beating Q2 expectations. KKD jumped to an early after hours high of 8.30 before settling between 7.79 and 8.19 through the bulk of its evening action. A pre-market open Friday may have legs near 7.85 to 8.10. KKD has recorded an earnings-driven after hours gain in seven of the last 10 quarters tracked in our database. Also, 42.9% of the time (three out of seven 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 28.2% (in three events) from the effective close. The historical data on the upside is not spectacular in terms of seeing consistent next-day outperformance in the shares of KKD. However, the stock's average 28% pop higher in follow-on action is a hefty number that at least bodes watching as an indicator that longs could catch a lofty upside ride off KKD. Longs may want to target potential positive entry points between 7.80 and 8.00, a range that could set up as a base support for bumps into the lower-8s.


OmniVision Technologies (NASDAQ:OVTI) was hammered 28.4% lower to 17.75 in Thursday's after hours trading after missing Q1 revenue estimates and setting its Q2 view below Street estimates. OVTI was released from an after hours trading halt and cratered to the 17.01 mark. It popped to 19 before sliding from this level to as low as 16.76 into the second half of night trade. A pre-market open Friday may have potential near 18.10 to 17.50. OVTI is mixed in its post-earnings share performance - widening its share reaction in the next day's regular session 14 times and narrowing or reversing for 14 events. In one other quarter, the stock ended the after hours flat and followed that move with a next-day gain. Looking deeper into the performance data, OVTI has seen an earnings-driven after hours decline in 14 quarters tracked in our database. In eight of those quarters, or 57% of the time, the stock has seen its declines move deeper south in the following day's regular session. Heavy sell momentum recorded in Thursday's after hours trading, combined with a moderate history of post-earnings widening on the downside, would have us looking at a short trade on OVTI Friday morning. Early shorts may want to target possible entry points at 18.50 to 18, an area that set up as a top through the late first-half and mid-session on Thursday night's trade. More risk tolerant shorts may want to test the waters closer to 18 to 17.80 as this area developed as a potential top deeper into the evening.

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