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.
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Stocks have been on a role since the beginning of March, with the major averages touching their highest levels since at least mid-February. With first-quarter earnings set to start in the coming week and the unemployment report out of the way, investors will want to see if the rally can continue.
Stocks managed to close out last week higher after sinking below their November lows on concerns about the weakening economy and increasing unemployment. The financial sector managed to make some positive headway after Citigroup (C) reassured investors that the first two months of 2009 were strong.
Investors will be closely watching Capitol Hill for signs of an expected financial package. Treasury Secretary Tim Geithner is expected to disclose the administration’s plans to address still-ailing financial institutions. The creation of a “bad bank” to warehouse bad loans is widely expected. Anticipation for a financial package sent stocks soaring on Friday despite a disappointing unemployment report. This week earnings will continue as investors hear results from Beazer Homes (BZH), SOHU.com (SOHU) and UBS (UBS), just to name a few.
