4:11 PM, Oct 28, 2009 — In Tuesday night’s Forecast Report, hard-falling Apollo (APOL) shares did lure higher-volume buyers from 58.79 to 61.55, signaling a buy target for risk-tolerant longs around the 57 evening low and also around 59-60.
A check of Wednesday’s action shows a buy at 57 is trading up nearly 14% to the regular-session high of 64.95.
Companies: Apollo Group
Price: 59.92 Price Change: -12.97 Percent Change: -17
While there are many stocks that demonstrate patterns where they consistently see their earnings-driven after-hours gains or declines continue the next day, the story on Intel (INTC) is clearly different. In short, investors should expect a reversal from any gains or losses after-hours tonight by the close tomorrow.
How do we know that you ask? Taking a look back at the after-hours earnings reaction history we’ve tracked for Intel and the story becomes quite clear. The chip maker has seen its earnings-driven after-hours price move reverse direction in 64% (14) of the last 22 quarters. In its most recent quarterly report on July 14 of this year, INTC gained 7.3% in the after-hours session after reporting its quarterly results, and ended the July 15 regular session up a slightly narrower 7.2% - not much of a difference for traders to anticipate a reversal but at least an understanding that INTC was likely not to add aggressively to its evening move between the sessions. However, some reversals over the past year have been much greater, leaving room for the nimble trader to make a quick profit.
Looking deeper into INTC’s movement between the sessions, it has seen an earnings-driven after-hours gain in 12 of the last 22 quarters. In 10 of those quarters, 83% of the time, INTC has reversed its evening gain, heading in the opposite direction in the following regular session - a stock shorts may want to keep a close eye on. On the downside, INTC has seen an earnings-driven after-hours decline in 10 of the 22 quarters in our database.
Take a look at this MIDNIGHTTRADER PRO VIDEO ALERT on Intel to get setup for tonight’s trade and see more detail on Intel’s past earnings reactions.
More video alerts are available to MidnightTrader Pro subscribers only. Sign up for a free trial here.
There is a season for everything, and unfortunately it’s flu season. Unless you’ve been living under a rock (or in Afghanistan), you’re well aware of the additional press this season has garnered thanks to our friends in the swine community. Needless to say, there tends to be quite a bit of excitement over health care shares related to potential blockbuster treatments of the disease or illness du jour. H1N1 is no different in causing the very common and typically unwarranted irrational exuberance from the average investor.
Taking a look at some recent extended-hours trading activity in leading health care companies that are linked in some way to the Swine flu and/or seasonal flu, we’ve uncovered some notable and consistent activity worth a glance.
Here’s a sampling of five stocks that have seen big flu news-driven volume in the pre-market (most release their news then), 12 events in all, and in 11 of those moves the stocks lost a good chunk of their gains by that day’s regular session close. For the long fans of this group it’s obviously a sector to play ahead of the bell and beat feet out. On the short side, bet the downside at the open and see how far south it goes. The below information is provided to our LIVE BRIEFS customers in real time.
Novavax (NVAX)
9/1 Pre-Market: +22%; 9/1 Reg. Session: +10.1% (Company News)
8/18 Pre-Market: +9.8%; 8/18 Reg. Session: +7.5% (Company News)
CEL-SCI Corp. (CVM)
9/16 Pre-Market: +22%; 9/16 Reg. Session: last down 1.5% (Company News)
9/15 Pre-Market: +25%; 9/16 Reg. Session: +48% (Company News)
BioCryst (BCRX)
9/15 Pre-Market: +12.7%; 9/15 Reg. Session: +8.7% (Company News)
Sinovac Biotech (SVA)
9/2 Pre-Market: +2.2%; 9/2 Reg. Session: -2.6% (Company News)
9/3 Pre-Market: +20.2%; 9/3 Reg. Session: +10% (Company News)
9/1 Pre-Market: +15%; 9/1 Reg. Session: +7.7% (Company News)
8/28 Pre-Market: +19.5%; 8/28 Reg. Session: +8% (Company News)
Vical (VICL)
9/10 Pre-Market: +8.7%; 9/10 Reg. Session: +5.9% (Company News)
9/8 Pre-Market: +5%; 9/8 Reg. Session: +1.4% (Company News)
9/3 Pre-Market: +14.5%; 9/3 Reg. Session: +12% (Company News)
Stay tuned for more LIVE BRIEFS alerts.
Don’t get too wrapped up in following the price trend in IBM after the close tonight as the blue chip company has a tendency to reverse gains or losses from the after-hours to the next day’s close following an earnings event.
IBM favors a long-term reversal pattern in its session-to-session performance, crossing narrower next-day percentage closing levels following after-hours earnings events in 12 of the last 20 quarters. In the near-term, the stock favors narrowing as well, cutting back or reversing its evening performance in next-day trade in three of the last four quarters.
MT Pro subscribers can listen to the video alert posted for today to get Steve Hill’s detailed commentary on IBM (plus a recap of Intel’s earnings event) in advance of the earnings news due out after the bell tonight.
Basically, consider a short if the stock rises in the after-hours and a long if it falls. Either way, it’s likely to reverse the trend from the after-hours to the close tomorrow. Set a stop loss at no more than a 1% loss on the trade.
Take a look at the historical reaction data we’ve collected over the past few years and you’ll get a sense of the trend.
On April 20, 2009, the stock fell 1.3% after an earnings beat, revenue
miss and reaffirmed guidance. Shares rebounded to gain 1.8% the next
day.
On Jan. 20, 2009, IBM advanced 4.2% in evening trade after reporting
better-than-expected results and guidance. The stock went even higher
the next day, rising 11.5% in the Jan. 21 regular session.
On Oct. 16, 2008, IBM advanced 2.3% in after-hours action after besting
earnings expectations. The gain evaporated the next day as IBM closed
the Oct. 17 regular session down 0.8%.
On July 17, 2008, IBM declined 0.5% in after-hours trade after topping
Q2 expectations. The stock reversed course the next day, and IBM
closed with a 2.6% gain on July 18.
On April 16, 2008, IBM gained 2.7% in after-hours trade after beating
Q1 expectations. That upside was cut back in the April 17 regular
session, with IBM ending the day up a slimmer 2.1%.
On Jan. 14, 2008, IBM pre-announced better-than-expected Q4 results
in pre-market trade and the stock advanced 8% before the bell. It
edged back from that upside in the following regular session, holding a
5.4% rise into the Jan. 14 closing bell.
Active-volume exchange-traded funds in Monday’s regular session:
SPDR S&P 500 (SPY): -2.3%
iShares S&P 500 (IVV): -2.3%
PowerShares QQQ (QQQQ): -2.1%
Select Financial Sector SPDRS (XLF): -2.6%
iShares Russell 2000 (IWM): -2.7%
iShares Russell 1000 Growth (IWF): -1.8%
iShares MSCI Emerging Markets Index (EEM): -3.6%
United States Oil Fund (USO): -2.3%
Top-volume movers in this morning’s pre-market session:
SPY, +0.2%
QQQQ, +0.4%
UNG, +3.4%
FAZ, -1.3%
DXO, +3.3%
Winners and Losers-
Major market ETFs, including the SPY, DIA, UYG and others, are firmer this morning as futures trade improved in step with upbeat economic data. Futures had chopped on either side of the even mark following a steep sell-off Monday. The PowerShares QQQ (QQQQ), which tracks the technology-studded Nasdaq Composite, is up 0.4%.
Technology Select Sector SPDR (XLK) should see increased interest closer to today’s bell. Microsoft (MSFT) is up 0.3%. Jefferies reportedly raised its price target on the stock this morning to $26 from $22 per share.
Financial stocks are modestly firmer this morning. Select Financial Sector SPDRS (XLF) is up 0.1%. The Direxion Financial Bull 3X fund (FAS) is up 1.1%; its bearish counterpart (FAZ) is down 1.3%. Within the sector, Huntington Bancshares (HBAN) is up for a second day in active volume after the stock was mentioned positively Friday night on Jim Cramer’s Mad Money show. Cramer suggested HBAN is the best speculative stock in the financial sector.
Commodities -
The United States Oil Fund (USO) is up 2.7%. Oil futures extended their gains after data showed a jump in housing starts and an increase in producer prices in May. July crude rose $1.83, or 2.6%, to $72.45 a barrel in electronic trading.
SPDR Gold Shares (GLD) is up 1.2%. August gold is up 1.2% to $938.80 an ounce after the economic data hit. iShares COMEX Gold Trust (IAU) is flat. The Market Vectors Gold Miners fund (GDX) is up 2.3% in early action. iShares Silver Trust (SLV) is up 2%.
ETF Power Play -
The SPDR S&P Retail fund (XRT) could see increased downside pressure closer to today’s bell.
Leading sector headlines, Best Buy (BBY) reports Q1 adjusted EPS of $0.42 vs $0.43 a year earlier and topping the Thomson Reuters mean analyst estimate for $0.34. Revenue rose to $10.1 billion from $9 billion a year earlier and in line with the Street view. Same-store sales fell 6.2% vs a gain of 3.7% in the same period a year earlier. The company maintains its FY 2010 guidance, expecting EPS of $2.50 to $2.90 ex-charges. The Street is at $2.79.
GET A 2 WEEK FREE TRIAL HERE FOR MORE AFTER-HOURS AND PRE-MARKET TRADING IDEAS.
Active-volume exchange-traded funds in Monday’s regular session:
SPDR S&P 500 (SPY): -0.4%
iShares S&P 500 (IVV): -0.4%
PowerShares QQQ (QQQQ): -0.3%
Select Financial Sector SPDRS (XLF): 0.7%
iShares Russell 2000 (IWM): -1.2%
iShares Russell 1000 Growth (IWF): -0.6%
iShares MSCI Emerging Markets Index (EEM): -1.6%
United States Oil Fund (USO): +0.4%
Top-volume movers in this morning’s pre-market session:
QQQQ, +0.4%
SPY, +0.4%
GLD, +0.2%
USO, +1.6%
IWM, +0.3%
Winners and Losers-
Major market ETFs, including the SPY, DIA, UYG and others, are firmer even as stock futures chop around the even mark ahead of today’s open. The PowerShares QQQ (QQQQ), which tracks the technology-studded Nasdaq Composite, is up 0.4%, topping volume ranks.
Technology Select Sector SPDR (XLK) is flat but should see increased interest closer to the opening bell. Texas Instruments (TXN) is up 5% and near the evening highs. The company expects Q2 revenue to be within a range of $2.3 to $2.5 bln, above its previous guidance range of $1.95 to $2.4 bln. EPS is seen in the range of $0.14 to $0.22 per share, above its previous view of $0.10 to $0.15 per share. The Street estimate is $2.2 bln in revs and earnings of $0.10 per share.
Banking issues are mostly firmer. The Treasury is preparing to announce today it will let 10 banks buy back government shares, people familiar with the matter said, signaling confidence some of the largest U.S. lenders won’t again need a taxpayer rescue, Bloomberg News reports. JPMorgan Chase (JPM) is among those cleared to repay Troubled Asset Relief Program funds, according to the story. Goldman Sachs (GS), American Express (AXP) and State Street (SST) are also among those that have sold shares and debt unguaranteed by the government, demonstrating they can raise funds without federal aid.
At last check, Select Financial Sector SPDRS (XLF) is up 0.8%. The Direxion Financial Bull 3X fund (FAS) is up 1.2% and among the most actively traded banking ETFs; its bearish counterpart (FAZ) is down 0.7%.
The SPDR S&P Retail fund (XRT) could see increased interest closer to the bell with some sector names reporting last night and this morning. Men’s Wearhouse (MW) firmed 9% (at 19.49) in Monday’s after-hours trade after reporting better-than-expected Q1 results. Talbot’s (TLB) swings to a loss on smaller sales and is cutting jobs. The company also guides for a slimmer Q2 loss than the Street expects.
Commodities -
SPDR Gold Shares (GLD) is up 0.2%. iShares COMEX Gold Trust (IAU) is flat. The Market Vectors Gold Miners fund (GDX) is up 1.4%. Gold is up for the first day in three sessions as the dollar declines against its European counterparts. At last check, gold for August delivery rose $6.10, or 0.6%, to $958.60 an ounce in early North American electronic trading.
Silver for July delivery gained 24.5 cents, or 1.6%, to $15.20 an ounce. iShares Silver Trust (SLV) is up 1.6%.
ETF Power Play -
The United States Oil Fund (USO) is up 1.6%. After a pause to start the week, oil futures are back on track toward $70, up nearly 2% early Tuesday. A steady to weaker dollar is boosting the appeal of oil. Several reports due this week will keep focus on the commodity. The U.S. Energy Information Administration will release its short-term energy outlook later today. The International Energy Agency and OPEC will release similar reports later this week.
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General Electric (GE) is due to report its Q1 results in the pre-market on Friday, April 17. Analysts polled by Thomson Reuters expect the company to report a profit of $0.21 per share on revenue of $39 billion. While most of Wall Street has shied away from GE, and for good reason, the time has come for a rebound on the heels of an in-line or upside earnings surprise.
From a fundamental point of view, the company maintains a healthy cash position and increasing revenues from the energy infrastructure and technology infrastructure segments. In addition, the company has signed new contracts and expanded a manufacturing facility in China, improving margins on related products and expanding its foothold in a country likely to become an ever greater economic engine.
The GE Capital credit concerns have been overblown and investors have been stepping back into the stock, pushing it up from staggering lows in the 6’s recent to over $11. There is still time and room to run. With a health dividend yield of greater than 10% and the sector’s lowest P/E, most investors would be wise to get paid while waiting for the stock price to rise.
From a historical price reaction perspective, when it comes to pre-market earnings events GE tends to see follow through gains or losses from the pre-market to the regular session close. In other words, the stock tends to follow-through with the trend that develops ahead of the open.
While we anticipate a positive reaction to any in-line or above estimates results, extended-hours traders tend to be right on with GE. As history shows and from a risk/reward standpoint, its best to just go with the trend.
On Jan. 23, 2009, shares fell 6.1% in the pre-market session after the company reported earnings in line but missed with revenue. The loss fattened to 10.7% in regular trading later that day.
On Oct. 10, 2008, GE rose 0.5% in pre-market trade after posting Q3 results in line with Street estimates. The stock recorded a sharp rise in the regular session, soaring to a 13.1% gain in the Oct. 10 regular session.
On July 11, 2008, GE declined 0.5% in pre-market trade after meeting earnings expectations, beating on revenue, and backing its fiscal year view. The stock turned positive in the following regular session, eking just higher, up 0.07% by the closing bell.
On April 11, 2008, GE tumbled 11.5% in pre-market trade after missing Q1 expectations and setting its guidance below Street estimates. It added to its downside in the following regular session, losing 12.8% by the closing bell.
On Jan. 18, 2008, GE advanced 2.3% in pre-market trade after meeting Q4 expectations and maintaining its 2008 guidance largely in line with the Street view. The stock added to its upside in the following regular session, gaining 3.3% by the closing bell.me stock news and trading ideas FREE for 2 weeks. < Learn More >here.
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To follow up on my last post, there is an Interesting post on the Ticker Sense blog which provides a good look ahead at the earnings calendar. You can view a copy of the post here:
Key earnings reports continue through the end of the month. Below we highlight some of the more significant reports expected over the next several days. Historically GOOG and ISRG are some of the more volatile names, and will likely create trading opportunities for those interested in the after hours.
Early gains are slowing evaporating as investors take some profits off the table following a nearly 5 week rally which began March 9th. I don’t think it’s a bad idea for short term traders to book some gains and look for the next trade. With the next earnings season coming up there will be plenty of great short term trades to take advantage of so keep some powder dry.
In the pre-market session this morning, Intuitive Surgical (ISRG) reported Q1 EPS of $1.02 per share, ex a $0.30 per share item, in line with Street estimates. Revs were $188.4 mln, below the analyst mean of $201 mln on Thomson Reuters.
While most investors are looking at the earnings results with an eye on consensus estimates and fundamental growth rates, etc. it’s more important to look at the market’s reaction to the earnings release and compare it to its reaction to similar news in the past. Don’t get lost in the numbers and keep it simple. Basically, forget everything you ever learned about earnings and look at the how the market perceives the news. In the case of ISRG the market tends to be on the right side following any earnings release with more room to go in the following days. Let history be your guide.
Going back over 4 years worth of quarterly earnings announcements, ISRG has seen wider follow-on regular session movement on the heels of 12 of its last 17 extended-hours quarterly reports. The near-term performance had been holding to a widening pattern as well as the stock has now added to its after-hours gains or losses by the close the following day in four of the last five quarters.
On Jan. 22, 2009, the stock fell 5% after ISRG met with earnings but misses with revenue. The loss was trimmed the next day to 2.8%.
On Oct. 16, 2008, the stock fell 0.4% as results topped the year-ago quarter but missed Street estimates. The loss swelled to 11.9% the next day.
On July 22, 2008, the stock jumped 11.7% in evening trading after beating the Street with Q2 results. The increase was a more robust 18.1% the next day.
On April 17, 2008, ISRG shed 9.7% in after-hours trade despite beating Q1 expectations. The stock added to its downside the following day, declining 17.2% by the closing bell on April 18.
On Jan. 31, 2008, the stock jumped 14.9% during evening trading after ISRG reported ahead of the Street with Q4 results. The gain swelled to 20.3% the next day.
It’s not too late for a long position ahead of the open in ISRG. History indicates more upside to go.
For real time earnings news and historical earnings reaction history get a 2 week FREE TRIAL to Earnings Notebook here.
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