Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of software-as-a-service (SaaS) provider Ultimate Software Group (Nasdaq: ULTI) popped by as much as 11% today before settling down to close out with a gain of 6% after cloud stocks got boosted by M&A activity.

So what: SuccessFactors (NYSE: SFSF) is being acquired by German software giant SAP (NYSE: SAP) in a deal valued at $3.4 billion. The deal carries a 52% premium and is giving hope to other cloud-based investors that industry consolidation may lie ahead.

Now what: Other cloud stocks jumped following the news, including Concur Technologies (Nasdaq: CNQR) and Taleo (Nasdaq: TLEO). Ultimate Software specializes in human capital management SaaS and human resource management solutions. The HR management market is estimated around $3 billion and counting, which may prompt large enterprise behemoths like Oracle (Nasdaq: ORCL) and SAP to pick up smaller shops.

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