BEAS - BEA Systems $85.56 (+8.31)

BEA Systems gave us a head fake on Wednesday, but we are not willing to let it get away, as the NASDAQ is starting to rally here. The company provides e-commerce infrastructure software. Their products allow companies of all sizes to integrate e-commerce applications such as Web-based banking, Internet sales, and supply chain management with pre-existing computer systems. BEAS is one of the early e-commerce issues. It was on the scene before the Internet craze of 1998 and well before the e-commerce craze of 1999. The stock debuted on 4/11/97, hitting a high of $1.63 intra-day. On Friday, shares of BEAS traded to an all-time high of $87.81, representing a 5,304% return in just over 3.5 years. Why? As always, look to earnings and revenues for an explanation. Last quarter, revenues came in at $186 million, an 80% year over year increase. Net income was $2.3 million compared to a $2.1 million loss last year. The company is expected to announce third quarter earnings per share of $0.06 on November 15. We would not be surprised to see a split announcement with the earnings release. The company set its first stock split on November 16, 1999 when the stock was trading at $72.50. Both of its previous split announcements were released with earnings reports and BEAS currently has enough shares for a split with 1.035 billion shares authorized and 316.8 million shares outstanding. Going forward, BEAS has support at the 5-dma, now up to $82.38, with stronger support at $80.69, the October 18 close. Resistance is the all-time high of $87.81 and then $90. We are looking for entry points on a bounce off of $82.38 or a breakout above $87.81 on midday volume of at least 4 million shares. We plan to set stops at $80.50 as protection.

Picked on Oct 22nd @ $85.56 Change since picked +0.00

ELNT - Elantec Semiconductor $104.63 (+12.19)

The Semiconductor Index (SOX) had a split personality problem last week, as it couldn't decide whether it was going to be evil or nice to investors. The volatility was incredible. The SOX started the week at 758.3, bottomed at 601.95 only to finish the week nearly unchanged at 752.85. Throughout this monster swing, Elantec successfully tested its 50-DMA at $86.28 and made a new high on Friday. This very strong relative performance is impressive considering that the SOX is so far from its all time high. Elantec designs and markets high performance analog chips. These chips are in high demand for the growing video, optical storage and xDSL industries. Elantec reported outstanding earnings after the close on Thursday and the news was obviously a very strong factor in the stock's climb into new high ground. ELNT earned $0.33 a share, which beat First Call's consensus estimates by six pennies. Revenue more than doubled to $36.9 million from the $14.3 million reported in the same quarter a year ago. Although split announcements commonly occur in conjunction with earnings releases, we still think Elantec is a bona fide split candidate. The company last split its shares in April. The 2:1 split occurred when the stock was trading at $69.75. With the stock trading over $100.00 per share currently, a split announcement becomes a real possibility. If the stock does not split, we feel that it can continue to rally based upon the earnings report as well as the lack of resistance that new high territory offers. The outstanding relative strength in the\is stock goes all the way back to May. It weathered the turmoil in the NASDAQ and the SOX (semiconductor index) like a champion. This can only mean that it has good institutional support that should this buying support should accelerate when the NASDAQ truly turns. The MACD has oscillated quite a bit recently but it did issue a buy signal on Friday. OBV is also breaking out as more money flows into this stock. Friday's volume was two times the average daily volume. This is a very volatile stock due to a low float and relatively low average daily volume of only around 750 K shares. The stock does seem to pivot around its 20-DMA. With this moving average currently residing at $93.69 we will set our initial stop at $93.50.

Picked on October 22nd @ $104.63 Change since picked +0.00

SEG - Seagate Technology Incorporated $78.94 (+10.56)

Seagate Technology manufacturers and markets its Winchester brand of magnetic ridge disk drives, which are sold to distributors, resellers, and original equipment manufacturers (OEM's). The company also targets the high-profit margined, high-end disk drive market for workstations and mainframes. Currently, SEG is on the move to becoming a privately held company, which could occur by as early as November. Although the exact price for the purchase of existing shares has not yet been established, investors seem to like the chances of a good payout, as witnessed by a steady advance in the stock. As for our play, the stock has just broken above firm resistance at the $71 mark. With this in mind, we'll look for further opposition to come at $80 and then $85. Should the stock break sharply through these levels on good volume, consider opening new positions. On the flip side, expect to see the $75 mark offer a firm base, with the 5-dma of $73.94 following just lower. Potential entries at these levels will occur when the stock can stage a strong bounce off them on good volume. Set stops below support at $72.25, to protect against a quick change in trend. Support and resistance will guide our entries/exits. Consider reconfirming entries with strength in the NASDAQ, or a buy signal from the High Tech Index (MSH).

Picked on October 22nd @ $78.94 Change since picked 0.00

WIND - Wind River Systems Inc. $42.38 (+3.31)

Wind River Systems, Inc. develops, markets, supports and provides consulting services for advanced software operating systems that allow customers to create complex, robust, real-time software applications for embedded computers. An embedded computer is a microprocessor that is incorporated into a larger device and is dedicated to responding to external events. Wind River's flagship products, the Tornado II development platform and the VxWorks real-time operating system, enable customers to enhance product performance, standardize designs across projects, reduce research and development costs and shorten product development cycles. This week the stock has enjoyed a 25% appreciation from its low of $35.00 on Wednesday. The gains continued through the week and hit a high point on Friday of $44.00. The stock is now a and does have enough authorized shares to set a 3:2 split. To date, all three of the company's splits have been a 3:2 split. The most recent split occurred in February of 1999. Next week, look for the stock to establish support at the 50-dma at $42.02, the 5-dma at $40.77 and the 200-dma at $39.72. Resistance poses an obstacle at the 20-dma at $42.65 and then at $44.00 in the near term. Those considering new plays should look for leadership in the NASDAQ Composite Index (COMPX) as well at the NASDAQ Computer Index (IXCO) to help blow the shares of WIND higher. Additionally, look for volume in the stock to come in above the average of 900K as another key element when considering opening a new position. We are placing our protective stop at $39.00.

Picked on October 22nd at $42.38 Change since picked 0.00