MTG, a holding company, provides private mortgage insurance coverage in the United States to the home mortgagelending industry through Mortgage Guaranty Insurance Corp. For the 3 months ended 3/31/01, total revenues increased 23% to $320.5M. Net income increased 24% to $157.9M. Revenues reflect an increase in new business writings and realized investment gains. Earnings also reflect higher gross margins.

May 31, 2001

MTG - MGIC Investment Corp $70.37 +2.27 (+3.53 this week)

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 every 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. 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 pretty good trendline support at $67.00 and have subsequently set our suggested stop just a little lower.

Picked on May 31st @ $70.37
Change since picked +0.00
Stop Loss @ $66.75