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Upside warning from SAP finds bears in sticky situation

HAVING TROUBLE PRINTING?
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This morning's upside revenue warning from software maker SAP Aktiengesell (NYSE:SAP) has technology stocks on the run and finds some bears with their paws in a sticky situation. The Germany based provider of collaborative e-business solutions reported licensing revenues of more that $890 million, nearly $200 million above analyst's forecasts.

SAP Aktiengesell Chart - Daily Interval

Shares of SAP gapped higher at the opening of trading, but the upside surprise has the GSTI Software Index (GSO.X) leading our sector gainer's list. Bulls in SAP will be targeting the $38.96 level near-term, with sight set on the $44 retracement. The point and figure chart has been bullish and current vertical count is bullish to $56. Some analysts advise caution as SAP has hinted about issuing a convertible to help fund acquisitions.

Other stocks/groups moving higher

My trading station has been flashing upside alerts all morning. Shares of Cisco (NASDAQ:CSCO) triggered an alert at $21.66, which came at our near-term bullish target from 12/28/01 commentary near $18.50. Shorter-term traders can take some profits, while longer-term swing traders and investors can begin raising stops.

The Gold/Silver Index (XAU.X) also triggered an upside alert at retracement of $57.30 undoubtedly due in part to the recent increase in consumer credit numbers. Overhead supply dating back to September/October is now being challenged, but the group is looking strong. February Gold Futures (gc02g) are up 1.11% at $282.30.

Software maker Microsoft (MSFT) $70.28 broke above the $70.02 level we mentioned in yesterday's commentary. Bulls will be pushing for the $73.59 level of retracement from here.

Jeff Bailey
Senior Market Technician
Option Investor

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