After Hours: Long Finisar, Shorting Esterline and Netflix

Includes: ESL, FNSR, NFLX
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.

Upside Movers

Finisar (NASDAQ:FNSR) advanced 8.7% at 20.22 in Thursday's after hours trading after beating Q1 EPS estimates and setting its Q2 guidance mostly in-line to above the Street view. FNSR jumped to plus-side levels between 19.76 and a session high of 20.75 at the start of after hours trading. It narrowed its gains to between 20 and 20.55 through the bulk of its night trade. Evening indications would suggest FNSR records a potential pre-market open Friday surrounding the 20.25 area. FNSR has recorded an earnings-driven after hours gain in three of the last seven quarters tracked in our database. Also, 100.0% of the time (three out of three 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 6.6% (in three events) from the effective close. The stock's tendency to add to evening upside moves, combined with some solid buy support recorded in the after hours, would have us looking at a long play in the shares on Friday. Early longs may want to target potential entry points near 19.75 to 20.25, a range where a potential base support could develop early Friday and perhaps see lift back into the mid- to higher-20s.

Downside Movers

Esterline Technologies (NYSE:ESL) declined 8.2% to 67.70 in Thursday's night trading after missing Q3 revenue expectations. ESL touched a brief early after hours high of 75.29 before diving to negative levels between 70.32 and a low of 67 - a range where it stayed through much of the evening session. A pre-market open Friday may have legs surrounding the 68 mark. Sellers established a ceiling level Thursday night at 70 to 68, levels shorts may want to eye through the early going Friday as there could be room to catch some downside weakness into the high- to mid-60s.

Netflix (NASDAQ:NFLX) dropped 8.5% to 213.30 in Thursday's night trading after Starz said it ended its contract renewal negotiations with Netflix. NFLX slid from 227.05 to a late first-half after hours low of 203.52 before steadying between 216.90 and 208.51 through the mid-session and second-half of evening action. A pre-market open Friday may have legs near 215 to 210. A tentative ceiling level developed in night trade off the 217 mark down to 215, an area more risk tolerant shorts may want to eye for possible downside drift back into the 212 to 210 area. We would be cautious on the short side and would look for quick exits if NFLX starts to turn higher Friday. There was firm buying seen off Thursday night's low of 203.52 up to 211, an indication a strong floor awaits traders down at these levels (which could see bounces back through the 215 to 217 area).

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

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