SunGard Data Systems, Inc. provides integrated IT solutions and "eProcessing" for financial services. SunGard also provides high availability infrastructure for business continuity. For the 3 months ended 3/31/01, total revenues rose 15% to $440.8M. Net income rose 30% to $54M. Revenues reflect higher demand from the financial service industry and acquisitions. Earnings also reflect the absence of a $1.6M merger charge, and higher operating margins.

May 16, 2001

SunGard specializes in offering information technology solutions to the financial community. They have products that make it easier for companies to web-enable clients, process transactions electronically and outsource business-critical operations. Fundamentally speaking, the company has topped analysts' earnings expectations for the last four quarters in a row. With the Fed cutting rates for the fifth time this year, SDS is hoping that this leads to a ramp up in trading that keeps SunGard's string of double digit profit growth alive. Looking at the chart, SDS has just broken out of a cup and handle formation on strong volume of 1.4 million shares. This represents an increase of 300,000 shares over SDS's three-month daily average volume. This is precisely what you want to see following a period of sideways action on lower volume. Today's strong move also higher helped to avoid a sell signal out of SDS's MACD. Going forward, new entries could be timed on a bounce off support at $60, or more aggressive traders could pick up the stock as long as it doesn't trade above today's high of $62.75. Look for daily volume to remain in the 1 million-share neighborhood on either of these moves. We are placing our stops at support of $58.40 to protect against a reversal.

Picked on May 16th @ $62.00
Change since picked +0.00
Stop Loss @ $58.40

May 24, 2001

SDS had a rough day on Thursday. Shares took a bit of a dump right after the bell. Otherwise the stock would have closed at $60.00. Whether or not this is was just a money manager adjusting his or her portfolio at the last minute, we will never know. However, we will put up the caution flag for tomorrow's open. We will watch for support at $59 to hold on any subsequent downdrafts. With today's loss of $1.79, SDS's MACD is set to roll negative tomorrow. Given the above scenario, we feel traders should wait to see if support at $59 holds before pulling the trigger. This is also because of the fact that our stop lies just below at $58.40. Any bounces off $59 should ideally come on daily volume of at least 900,000 shares.

Picked on May 16th @ $62.00
Change since picked -2.29
Stop Loss @ $58.40

May 22, 2001

SunGard tacked on $0.61 during Tuesday's session after a Deutsche Bank Alex Brown analyst initiated coverage of the computer service provider with a "buy" rating. Mark D'Annolfo of Duetsche Bank believes that SunGard combines the predictability of a computer services stock with the higher margins of a software company. He also likes the fact that SDS almost dominates its core businesses. We couldn't agree more. Given the ringing endorsement, we would have thought that shares of SDS would have responded more positively. However, the stock only traded 440,000 shares, well shy of its three-month average of 940,000 shares. Going into the later part of this week, we will be watching for volume to move back towards 900,000 shares as SDS tests resistance at $63. Traders interested in initiating new positions in SDS could consider doing so on a break through $63 on volume that puts SDS on pace to do 950,000 shares for the day.

Picked on May 16th @ $62.00
Change since picked +0.65
Stop Loss @ $58.40

May 20, 2001

SunGard eased another $0.09 on Friday after dropping $1.00 on Thursday. Unfortunately, we added SDS to our Current Play list on Wednesday evening, so we are in the red on this stock. Fortunately, though, only 613,400 shares were traded on Friday, roughly 300,000 less than the three-month average daily volume, so there wasn’t a mad rush to the exits. Despite stumbling out of the gate, we still think SDS could make a strong run into its split-payable date on June 18th. To that end, its MACD remains in a strong up trend while its Stochastic isn’t showing its stock to be overbought. With that said, it’s possible that SDS might take the next few sessions to consolidate around $60, so there may be another day or two of selling pressure. With that said, traders considering a position in SDS should look for a move through Friday’s intra-day high of $61.25 or a bounce off $60 on 400,000 shares traded by midday.

Picked on May 16th @ $62.00
Change since picked -1.09
Stop Loss @ $58.40