After Hours: Going Long Intuitive Surgical, Short On Apple

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Includes: AABA, AAPL, INTC, ISRG
by: Midnight Trader

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.

UPSIDE MOVERS

Intel (NASDAQ:INTC) advanced 4.1% to 24.37 in Tuesday's after hours trading after reporting better-than-expected Q3 results and Q4 revenue guidance above Street estimates. INTC advanced through the 23.85 level to a first-half after-hours top of 24.60. It backed off to about 24.30 before again rising to 24.55 into the mid-session and early second-half. Sellers grew more aggressive deeper into the evening, dropping INTC from 24.54 to 24.28. Evening indications would suggest INTC records a potential pre-market open Wednesday near 24.20 to 24.40. We noted earlier on Tuesday that INTC is a stock for longs to be wary of in the off-hours. INTC has recorded an earnings-driven advance in the after hours in 19 of the last 30 quarters we've tracked. However, it saw that advance reverse or narrow in next day trade in 16 of those quarters, or 84% of the time. The strong reversal pattern in place in INTC shares opens the door for shorts to eye the shares through the early-going on Wednesday. The Tuesday evening top of 24.60 down to 24.40 set up as a potential ceiling level that could hold out prospects for shorts to ride downside momentum into the lower 24s. On the long side, buyers looked most confident at 23.85 up to 24.20, an area where a near-term floor support could develop for possible pops back into the mid-24s.

Yahoo! (YHOO) advanced 2.6% to 15.88 in Tuesday's after hours trading after topping Q3 Street estimates. YHOO firmed from 15.60 to an after hours high of 16.14 through the first-half of night trade. It settled between 15.82 and 16.07 into the mid-session and second-half of the evening. A pre-market open Wednesday may have potential surrounding the 15.90 area. YHOO has recorded an earnings-driven evening gain in 16 of the last 29 quarters we've tracked in our database. It has reversed or narrowed that gain in next-day regular session nine times, about 56% of the time. The modest reversal trend in place, combined with what was a fairly firm ceiling Tuesday night at 16.14 down to 16 would have us watching this area as a prospective short play that could see downside drift back into the higher 15s. Longs may want to watch for any retreat back toward 15.60 to 15.80, an area that could set up as a near-term floor support that perhaps again looks to test the higher-15s.

Intuitive Surgical (NASDAQ:ISRG) firmed 7.6% to 411.95 in Tuesday's night trade after beating Q3 expectations. ISRG firmed to plus-side levels between 400.13 and a high of 415 through the first-half of after hours action. It tightened its upside range into the second-half, moving between 406.31 and 413.50. Evening indications would suggest ISRG records a potential pre-market open Wednesday near 408 to 414. ISRG has seen wider follow-on regular session movement on the heels of 19 of its last 27 extended-hours quarterly reports, 70% of the time. Near term, the stock has widened its move in four of the past six quarters. Looking deeper into the performance data, ISRG has recorded an after-hours gain in 17 of the quarters we've tracked, adding to its gains the next day in 13 quarters (76% of the time). The bullish widening patterns in place, both long-term and on the plus-side, would have us looking at an aggressive long trade in ISRG shares Wednesday. Early buyers may want to target possible entry points near 408 to 413, a potential base level support that could see lift back toward the 415 area, or perhaps seek out a fresh 52-week high above 415.

DOWNSIDE MOVERS

Apple (NASDAQ:AAPL) declined 6.7% to 393.60 in Tuesday's night session after missing Q4 expectations and setting its Q1 guidance above Street estimates. AAPL cratered to a first-half after hours low of 388.91 in the immediate wake of the company's disappointing quarterly report. Buyers flooded in off this low and goosed AAPL to as high as 408 before it fell back to hold a negative range of 404 to 392.11. A pre-market open Wednesday may have legs near the 398 to 392 range. Over the course of eight years worth of quarterly earnings data we've accumulated on AAPL, the stock has recorded nine earnings-driven after-hours declines - adding to its negative trade five times in next-day action, and reversing direction four times. The downside data is decent in terms of supporting a short play on the shares, but we would still be wary of the prospects for a sharp reversal so shorts may want to play the issue with an eye for a quick exit. Potential downside entry points near 400 to 395 may offer opportunities as downside liquidity was vigorous at these levels Tuesday night.

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