I've had shares of Sungard Data Systems (NYSE:SDS) $15.81 -17% on my bearish watch list ever since it was announced that the company's stock was being added to the S&P 500 Index on July 19th. This morning, I ignored the "downside alert" at $18.50 and I shouldn't have as the stock is falling sharply and I can't find any news.
In recent weeks, technicals exhibited like we see in SDS in other stocks have eventually been hit with some type of "bad news." For an aggressive bear looking to play some of these types of technicals in a stock that looks like market participants are getting out in a rather quick fashion, I've profiled the SDS October $17.50 puts (SDSVW) in today's market monitor. A longer- term put trader may also take a look at the SDS January $17.50 puts (SDSMW) $3.70 as a trade for potential "tax loss selling" that the stock may come under should other mutual funds look to rid their portfolios of the stock, take the loss, to offset any other gains.
Sungard Data (SDS) - Daily interval
With a bearish count of $6.00, I'm thinking some mutual funds are looking for a "changing of the gaurd/gard" and with no news that I can find, something looks wrong. The above chart with retracement is what I'd use to manage a bearish trade. For my market monitor profile of the October $17.50's in a 1/2 position, should SDS announce some type of "bad news" and the stock trade a range between $11 and $13.85, I'd look to book some gains. For longer-term put traders in the January puts, a further bearish price objective from the point and figure chart of $6-$8 would be my target.