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After-Hours Movers: Short Alcoa and Novellus, Long Clean Energy Fuels

Below is a brief recap on each of the top-volume, news-driven movers in Monday’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 Tuesday’s pre-market and early regular session. DOWNSIDE MOVERS Alcoa (AA) edged 1% lower to 15.75 in Monday’s after-hours trading after meeting Q2 earnings estimates and beating on revenue. AA saw some volatility in the immediate wake of the company’s earnings report, dropping to an early after-hours low of 15.40 before spiking to a session high at 16.16. It slid to hold a mostly downside range surrounding the flatline, between 16 and 15.80, through the bulk of its after-hours action. A pre-market open on Tuesday may have potential near 15.95 to 15.80. AA has a strong tendency to add to its earnings-driven after-hours decline in next-day regular session action. AA has recorded an after-hours decline in 15 of the last 29 quarters we’ve tracked, and 11 times, or 73% of the time, that decline has widened for deeper losses by the following day’s regular session close. While AA’s performance on the downside bodes well for the short side in Tuesday’s trade, we would still be cautious of betting too heavily on an outsized drop tomorrow as some tentative floor support did develop in the shares Monday night in the low 15.80s. Shorts may want to watch for any lift back up near 16.10 to 16, levels that stood as a first-half after-hours ceiling and where there may be room to ride weakness back into the high-15s. Novellus Systems (NVLS) slumped 5% to 33.98 in evening trading after coming in shy of Q2 sales estimates and beating on earnings. NVLS touched a brief early after-hours high of 36.10 before dropping to a downside range of 35.77 to 34.75. Sellers grew more aggressive into the mid-session and second-half of night trade, punching NVLS down from 35.04 to a low of 33.50. Some tentative buy support rolled in late at 33.50 up to near 33.75. Evening indications would suggest NVLS records a potential pre-market open surrounding the 33.75 mark. NVLS favors a broader widening pattern in its performance between the sessions following extended-hours earnings events recorded within our database. The stock has seen its evening movement widen 16 times and narrow 12 following its last 28 earnings events. In the near term, NVLS favors widening its move between the sessions, adding to its evening performance in next-day trading in the last four consecutive quarters. Looking deeper into the performance data, NVLS has recorded an earnings-driven after-hours decline in 19 of the 28 quarters tracked. Of that number, the stock has seen a more aggressive negative next-day move in 11 of those events, or 58% of the time. The tendency to add to evening declines, combined with some solid downside pressure in Monday night’s trade would have us looking at possible short plays on NVLS Tuesday. Shorts may want to watch the 35 to 34.25 area as a possible top. More risk tolerant shorts may look to sit closer to the 34 to 33.75 area as it’s likely the stock starts the day closer to this range and perhaps sees some dips into the mid-33s. UPSIDE MOVERS Clean Energy Fuels (CLNE) jumped 7.5% to 14.11 in night trade after Chesapeake Energy (CHK) announced a $150 million investment in the company’s convertible debt. CLNE vaulted to an early after-hours high of 14.87 before dropping back to maintain gains between 13.94 and 14.50 – levels where it stayed through the bulk of its night session action. A pre-bell open Tuesday may have potential in the 14.10 to 14.30 area. Buyers attempted to hold a floor support Monday night at 13.94 to 14.10, levels longs may want to eye as a potential long entry point that could catch some bounce back toward the lower- to mid-14s. 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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