MTG - MGIC Investment Corp. $64.69 (+4.31)

Mortgage Guaranty Insurance Corporation (MGIC), the principal subsidiary of MGIC Investment Corp., is the leading provider of private mortgage insurance in the United States. Shares of MTG bottomed at $31.94 on March 8, just one day before the NASDAQ hit its all-time high. As the technology and Internet sectors began to slide, MTG rallied as investors moved money into safety stocks. More recently, MTG was trading at the $59-$64 range until Friday, when the stock traded to a new 52-week high of $66.75 on heavy volume. We believe that more sector rotation will drive MTG higher. The Company announced great earnings on October 10 and the BoD just met on Thursday but did not announce a split, so MTG is more of a momentum play at this point. With mortgage rates falling to one year lows and Freddie Mac and Fannie Mae announcing that they are going to shore up their respective mortgage programs, we feel the time is ripe for mortgage insurers to shine. Going forward, support is the October 25 intra-day low of $62 with stronger support at the $60 mark, just below the October 24 intra-day low. Resistance is the 52-week high of $66.75 and then the 3/6/98 close of $70.25. We are looking for entry points on a bounce off of $62 or a breakout above $66.75 on volume greater than 300,000 shares by midday, with a stop placed at $60.

Picked on October 29th @ $64.69 Change since picked +0.00

SBC - SBC Communications, Inc. $56.31 (+5.56)

SBC Communications, Inc. Provides comprehensive telecommunications products and services through a global network of leading brands and operations in the U.S. and 21 other countries around the world. FORTUNE magazine has named SBC the worlds most admired Telecommunications Company. SBC is the only company to have won the top honor in the telecommunications survey since its inception in 1997. We like the stock for a number of reasons. First, on October 23rd the company beat earning expectations by a penny, making it the 5th quarter in a row the company has either beat or matched expectations. Secondly, the company achieved a new 52-week high on Friday of $56.63 on nearly two times it normal volume. Finally, at its current level the stock has tiptoed back into its split territory and, low and behold, the company has enough authorized shares for a 2:1 split. The technicals look good as well. Support is established at the 5-dma at $54.70, then the 10-dma at $53.23 and finally the 20-dma at $52.17. Resistance, until broken, will be the new high at $56.63. We will safeguard ourselves with a stop loss at $52.00 below the lowest support level.

Picked on October 29th @ $56.31 Change since picked 0.00

TXN - Texas Instruments $44.69 (-2.81)

One of the biggest questions facing this market is whether semiconductor stocks have bottomed. Texas Instruments is a significant component of the Semiconductor Index (SOX), which has seen better days. However, all is not lost because it appears that the Index and TXN itself has found some significant support. The traditional October swoon for semis has nearly cut the SOX and TXN in half. The SOX has found support just above 650 and TXN has found support just above $40.00. The charts of the SOX and TXN practically mirror each other. If we can get the Mutual Fund and Institutional window dressing behind us, then it is probable that TXN will start to accumulate some of the cash that is currently sitting on the sidelines. On October 18th Texas Instruments reported profits of $0.33 per share, which were in line with analyst's consensus expectations. Unfortunately, TXN hurt the entire sector by saying that semiconductor revenue would only rise slightly in the fourth quarter. Analysts were looking for growth of 7 to 8 percent. Market participants were particularly concerned about statements that indicated that wireless chip revenue would actually drop. This is troubling considering that TXN is the largest supplier of chips to the cell phone industry. Following this less than encouraging report, Lehman Brothers downgraded the stock to "Neutral" from "Outperform". Our interest in this play is inspired by the fact that TXN is not a one trick pony and the stock sports a relatively low P/E of 26.29. An article in the October 23rd edition of Barron's (notorious critics) stated that Texas Instruments could be a bargain among telecommunications equipment companies. In a statement on Friday (that may have been designed to stop the bleeding in the share price of TXN), Thomas Engibous, the Chairman and CEO of TXN, said that the Company sees strong global demand for its products, despite signs that the US economy is slowing down. Thus, we could have a classic value play on our hands. Shares of Texas Instruments may have hit a capitulation low of $35.00 on October 18th. At that time the RSI was indicating an oversold condition. That condition has since been alleviated. On the plus side, the MACD issued a buy signal last week and that means TXN could be ready for a continued bounce. Longer term resistance for this potential bounce is likely to be found at the 50-DMA at $56.84. Short term support can be found at the 10-DMA slightly above $44.00. We are placing a stop at $40.00, which was just above the intraday high of the day that TXN established support at $35.00. Since earnings have already been released and a split appears unlikely at these prices, we will most likely exit this position with a stop.

Picked on October 29th @ $44.69 Change since picked +0.00