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BEA Systems - BEAS - close: 7.79 chg: -0.11 stop: 8.04

Company Description:
BEA Systems, Inc. is a world leader in enterprise infrastructure software, helping enable companies to improve business responsiveness through service-oriented architecture (SOA), a software design approach that more closely aligns IT with business objectives. With 15,000 customers worldwide including the majority of the Fortune Global 500, BEA and its WebLogic and Tuxedo brands are among the most trusted names in business technology. Headquartered in San Jose, Calif., BEA has 77 offices in 37 countries. (source: company press release)

Why We Like It:
We normally don't like to suggest short positions on stocks that trade under $10.00 a share. However, considering the bearish technical breakdowns in both the NASDAQ Composite and the GSO software index we're going to suggest readers consider bearish plays on BEAS. BEAS turned in a nice rally back in the second half of 2004 but like many stocks 2005 has not been kind. Shares have essentially been consolidating sideways but under a pattern of lower highs the last few months. More importantly BEAS broke down below this bearish wedge-like pattern several days ago but managed an oversold bounce right back to resistance near $8.00. The stock appears to be rolling over again under $8.00 and shares just closed right at the 200-dma. Readers should know that one of the biggest risks with bearish positions in BEAS is a takeover. There has been takeover chatter about BEAS as a target for months but one look at the chart and you can see that the overall trend this year has been one of selling, not buying. We obviously don't expect BEAS to be taken over in the next few weeks but it is a significant risk. Our short-term six-week target is the $7.00 region but we want to see a little more confirmation that the stock is truly rolling over again. Thus we're going to use a TRIGGER at $7.73 to open the play. Until BEAS trades at or below $7.73 we'll sit on the sidelines.

Picked on April xx at $xx.xx <-- see TRIGGER
Change since picked: - 0.00
Earnings Date 05/18/05 (unconfirmed)
Average Daily Volume: 7.6 million
 

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