|PLAY > New Plays
||Thursday, May 31, 2001
New Split Plays
New Candidate Plays
- MGIC Investment Corp $70.37 +2.27 (+3.53)
MGIC, which is a private mortgage insurance company, is a clear
beneficiary of the slew of interest rate cuts we have seen. Lower
interest rates almost always stimulate new home sales, as well as
mortgage refinancing. MGIC employees are probably very busy these
days. The stock has been on a very nice run since it came close to
testing its 200-DMA of $60.50 back in mid-April. The stock is fast
approaching the price level it was at when the company announced its
last split. The last split was announced in May of 1997 when the stock
was trading at $82.00. The technical situation really improved today.
Not only did the stock have a nice gain today, but it was accomplished
with solid volume of 830,300 shares or just about 100,000 shares more
than the average daily volume. In addition, MTG closed above its
neckline at $70, completing an inverse head and shoulders breakout.
MGIC is now in striking distance of its all time high of $74.50 and its
52-week high of $71.50. Therefore, a rally above $71.50 tomorrow,
might propel the stock very quickly to the $74.50 resistance.
Obviously, this would be a nice little trade. The MACD is positive and
supports the possibility of a continued rally. One mild concern is the
RSI, which is hitting resistance and is suggesting a mildly overbought
condition. We see some good trendline support at $67.00 and have
subsequently set our suggested stop just a little lower at $66.75.
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