Sina (SINA) declined about 4.5% to 78.35 late in Tuesday's after-hours trade after posting results and guidance, but despite the negative trade, longs should give this one a hard look, as the stock has a strong tendency to reverse direction in next-day trade.
SINA has recorded an earnings-driven after-hours decline in five of the last 11 quarters tracked by our MT Pro database. 80.0% of the time (four out of five times) the stock reversed in the opposite direction by the close of the next day's regular session, compared to the extended hours "effective close." When it reversed, the price closed in the opposite direction on average by 9.0% (in four events) from the "effective close."
The solid reversal trend in place -- and some decent upside liquidity that flowed into SINA shares off the Tuesday night after-hours low -- may open the door for more risk-tolerant longs to eye the stock off any revisit down to the 78 to 77 area ... levels that saw decent upside liquidity as the stock rose off its bottom Tuesday night.
SINA dropped in evening trade after topping Q4 estimates, guiding in-line for Q1 and announcing a deal to buy shares of Mecox Lane (MCOX), a Chinese online platform for apparel and accessories.
SINA slumped through the 81 mark to an after-hours low of 77 before spiking back up to 81 after the mid-session. It spent much of the second-half of after-hours trade drifting south from 80 to 78.
A pre-market open Wednesday may have potential in the 80 to 78 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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