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Play of the Day (For Tuesday)
Interactive Chart
Monday, March 19, 2001

RDN - Radian Group $61.30 +0.30

Sunday's Comment:

Radian (RDN) provides private mortgage insurance and risk management services to residential mortgage lenders, commercial banks and savings institutions. The company's niche market in private mortgage insurance protects lenders from default on home buyers who make down payments of less than 20% of a home's purchase price. Focusing on this niche market has paid off tremendously for the company. RDN grew annual EPS by a staggering 68% last year. Wall Street has also taken notice of the company's performance, as all nine firms covering RDN presently hold a "Buy" rating on shares. Currently, RDN has 80.0 million shares authorized and 46.25 million shares issued, with the last recorded split having taken place on December 2nd, 1996 at $76. Although the BoD will need to authorize more shares before a 2:1 stock split can take place, we certainly feel this is a possibility. As for the stock, we feel RDN may be forming a bottom. The technical indicators certainly suggest this, with both the MACD and stochastic on the verge of bullish crossovers. In addition, the $60 level has held as support a staggering eight times over just the past month and a half. With that said, should shares trend higher in the upcoming week, we'll look for resistance to occur at the 50-dma of $61.78, followed by a stiffer challenge at $65. Support will come at the $60 mark. Look to time entries when RDN shares bounce off support or break above the 50-dma on volume of at least 225,000 shares traded by midday. We'll set our initial stop at $59, to limit our downside risk.

Monday's Update:

Despite reporting outstanding quarterly results last month, Radian's stock has gone nowhere fast, trading in a $55 to $65 range for the past three weeks. Trader enthusiasm for Radian has probably been muted by interest rate concerns, which could change tomorrow should the Fed come through with a 75-basis point cut in the fed funds rate. Still, even if the market doesn't get 75- basis points, Radian shouldn't move much lower. The stock appears to have solid support at $60, from where it has inched gradually higher over the past four sessions to Monday's close of $61.30. At its current price, Radian does have some immediate overhead resistance at its 10- and 200-day moving averages at $61.90 and 62.84, respectively. However, once these levels are breached a move to $65 could be in he cards. To that end, the MACD looks set to turn positive while the Relative Strength Index is showing the stock to being close to oversold. Traders considering a position in Radian will likely have to be patient because it just isn't a fast mover. With that said, entry points could be considered on a move through Monday's intra-day high of $61.55 on volume of 200,000 shares traded by noon EST.

Picked on March 18th @ $61.00
Change since picked +0.30
Stop Loss @ $59.00

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