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Software under pressure

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In yesterday's market monitor on OptionInvestor.com we went looked at some software stocks like Check Point Software (NASDAQ:CHKP), Internet Security Systems (NASDAQ:ISSX) and RSA Security (NASDAQ:RSAS). We thought all of these looked technically weak.

This morning, PeopleSoft (NASDAQ:PSFT) is trading down 23% at $28.60 in heavy pre-market action after the company warned that quarterly license revenues of between $130 and $135 million in the past quarter were going to be less than the originally expected $160 million and have earnings per share closer to the 14-cent per share level. This represents an earnings "miss" of 1 penny a share.

PeopleSoft Chart - Daily Interval

Shares of PSFT look to open near the 38.2% retracement level and if a subscriber were short the stock into this morning's news, I'd look to snug a stop down just above the $30.00 level to help protect a nice gain. Look for any rallies to the $33.59 level to find sellers near-term with a potential bearish target near 19.1% retracement of $23.93.

Qwest Communications to take $20-$30 billion charge

The Securities and Exchange Commission will recommend action against telecom service provider Qwest Communications (NYSE:Q) $8.00 over the way it reported fourth quarter 2000 earnings. In a conference call held late yesterday, the company also said it expected to record a charge of between $20 billion and $30 billion in 2002 to write down the value of assets it acquired.

Earnings before the bell

There were few earnings slated before the bell but could partially impact the various sectors these stocks are associated with. In the electronics retailing area Best Buy (NYSE:BBY) reported earnings of $1.62, beating estimates by a penny. Fellow retailer Circuit City (NYSE:CC) met consensus estimates after reporting earnings of $0.73 a share.

In the healthcare space, Tenet Healthcare (NYSE:THC) $67.36 reported earnings of $0.86 a share, beating estimates by 4 cents.

After today's close, InterVoice (NASDAQ:INTV) $6.24 is the only company scheduled to report earnings. Estimates are wide-ranging as Multex consensus is for a loss of $-0.26 a share, while a poll conducted by Zacks has consensus of a loss of $-0.13 a share.

Futures lower

Stock futures are decidedly lower this morning with S&P futures trading down 4.5 points at 1,140. NASDAQ futures are lower by 28.50 at 1,455, while Dow futures are down 45 points at 10,300.

Fair value for the S&P 500 today is $2.02. HL Camp & Company has their computers set for program buying at $3.32 and set for selling at $0.97. Fair value for the NASDAQ-100 today is $6.87.

Jeff Bailey
Senior Market Technician
Option Investor

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