-----BEGIN PRIVACY-ENHANCED MESSAGE-----
Proc-Type: 2001,MIC-CLEAR
Originator-Name: webmaster@www.sec.gov
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 TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB
MIC-Info: RSA-MD5,RSA,
 Ew3EQi/dt5HN2gxd3lGAr1OTKcsJc1Yy4SwVFhM/no+z7pdznbSf3hpO5ZOD0Keu
 RxWkJs7+Zim+WS4dkSYd2A==

<SEC-DOCUMENT>0001072613-06-000620.txt : 20060314
<SEC-HEADER>0001072613-06-000620.hdr.sgml : 20060314
<ACCEPTANCE-DATETIME>20060314142151
ACCESSION NUMBER:		0001072613-06-000620
CONFORMED SUBMISSION TYPE:	4
PUBLIC DOCUMENT COUNT:		1
CONFORMED PERIOD OF REPORT:	20060310
FILED AS OF DATE:		20060314
DATE AS OF CHANGE:		20060314

ISSUER:		

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			DATAWATCH CORP
		CENTRAL INDEX KEY:			0000792130
		STANDARD INDUSTRIAL CLASSIFICATION:	SERVICES-PREPACKAGED SOFTWARE [7372]
		IRS NUMBER:				020405716
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			0930

	BUSINESS ADDRESS:	
		STREET 1:		175 CABOT STREET
		STREET 2:		SUITE 503
		CITY:			LOWELL
		STATE:			MA
		ZIP:			01854-3633
		BUSINESS PHONE:		978-441-2200

	MAIL ADDRESS:	
		STREET 1:		175 CABOT STREET
		STREET 2:		SUITE 503
		CITY:			LOWELL
		STATE:			MA
		ZIP:			01854-3633

REPORTING-OWNER:	

	OWNER DATA:	
		COMPANY CONFORMED NAME:			POTTER TERRY W
		CENTRAL INDEX KEY:			0001226521

	FILING VALUES:
		FORM TYPE:		4
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-19960
		FILM NUMBER:		06684636

	MAIL ADDRESS:	
		STREET 1:		C/O DATAWATCH CORP
		STREET 2:		175 CABOT STREET STE 503
		CITY:			LOWELL
		STATE:			MA
		ZIP:			01854
</SEC-HEADER>
<DOCUMENT>
<TYPE>4
<SEQUENCE>1
<FILENAME>pro-potter_14218ex.xml
<TEXT>
<XML>
<?xml version="1.0"?>
<ownershipDocument>

    <schemaVersion>X0202</schemaVersion>

    <documentType>4</documentType>

    <periodOfReport>2006-03-10</periodOfReport>

    <notSubjectToSection16>0</notSubjectToSection16>

    <issuer>
        <issuerCik>0000792130</issuerCik>
        <issuerName>DATAWATCH CORP</issuerName>
        <issuerTradingSymbol>DWCH</issuerTradingSymbol>
    </issuer>

    <reportingOwner>
        <reportingOwnerId>
            <rptOwnerCik>0001226521</rptOwnerCik>
            <rptOwnerName>POTTER TERRY W</rptOwnerName>
        </reportingOwnerId>
        <reportingOwnerAddress>
            <rptOwnerStreet1>C/O DATAWATCH CORPORATION</rptOwnerStreet1>
            <rptOwnerStreet2>271 MILL ROAD, QUORUM OFFICE PARK</rptOwnerStreet2>
            <rptOwnerCity>CHELMSFORD</rptOwnerCity>
            <rptOwnerState>MA</rptOwnerState>
            <rptOwnerZipCode>01824</rptOwnerZipCode>
            <rptOwnerStateDescription></rptOwnerStateDescription>
        </reportingOwnerAddress>
        <reportingOwnerRelationship>
            <isDirector>1</isDirector>
            <isOfficer>0</isOfficer>
            <isTenPercentOwner>0</isTenPercentOwner>
            <isOther>0</isOther>
        </reportingOwnerRelationship>
    </reportingOwner>

    <derivativeTable>
        <derivativeTransaction>
            <securityTitle>
                <value>Stock Option (Right to Buy)</value>
                <footnoteId id="F1"/>
            </securityTitle>
            <conversionOrExercisePrice>
                <value>3.61</value>
            </conversionOrExercisePrice>
            <transactionDate>
                <value>2006-03-10</value>
            </transactionDate>
            <transactionCoding>
                <transactionFormType>4</transactionFormType>
                <transactionCode>A</transactionCode>
                <equitySwapInvolved>0</equitySwapInvolved>
            </transactionCoding>
            <transactionAmounts>
                <transactionShares>
                    <value>5000</value>
                </transactionShares>
                <transactionPricePerShare>
                    <value>0</value>
                </transactionPricePerShare>
                <transactionAcquiredDisposedCode>
                    <value>A</value>
                </transactionAcquiredDisposedCode>
            </transactionAmounts>
            <exerciseDate>
                <footnoteId id="F2"/>
            </exerciseDate>
            <expirationDate>
                <value>2016-03-10</value>
            </expirationDate>
            <underlyingSecurity>
                <underlyingSecurityTitle>
                    <value>Common Stock</value>
                </underlyingSecurityTitle>
                <underlyingSecurityShares>
                    <value>5000</value>
                </underlyingSecurityShares>
            </underlyingSecurity>
            <postTransactionAmounts>
                <sharesOwnedFollowingTransaction>
                    <value>5000</value>
                </sharesOwnedFollowingTransaction>
            </postTransactionAmounts>
            <ownershipNature>
                <directOrIndirectOwnership>
                    <value>D</value>
                </directOrIndirectOwnership>
            </ownershipNature>
        </derivativeTransaction>
    </derivativeTable>

    <footnotes>
        <footnote id="F1">Stock Options issued pursuant to the Datawatch Corporation 1996 Stock Plan.</footnote>
        <footnote id="F2">416 will vest on 6/10/06 and an additional 416 shares will vest at the end of each three-month period thereafter for ten (10)
 such periods, with 424 vesting on 3/10/09. This vesting schedule is subject to acceleration in certain instances in
 connection with an acquisition or other change of control event.</footnote>
    </footnotes>

    <ownerSignature>
        <signatureName>/s/ John J. Hulburt, power of attorney for Terry Potter</signatureName>
        <signatureDate>2006-03-13</signatureDate>
    </ownerSignature>
</ownershipDocument>
</XML>
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
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