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

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

June 7, 2001

MTG had a stellar $2.30 up day on Wednesday, so we weren’t too surprised by the slight pullback Thursday. MTG shares actually traded as high as $74 on Wednesday before pulling back into the close. Lighter volume and low volatility marked Thursday’s trade in MTG, so we might see a pickup going into the weekend. That being said, traders should be aware that resistance has come in at $73 and $74, so we would wait until resistance at $74 is conquered before adding new positions. More aggressive traders might consider adding positions on a break above $73, with a corresponding tight stop at $71. Our stops on this play remain at $66.75 to protect on the downside.

Picked on May 31st @ $70.37
Change Since Picked +1.40
Stop Loss @ $66.75

June 5, 2001

MTG made up some lost ground on Tuesday, and did so on improved volume. MTG traded 530,000 shares and advanced back towards its neckline. The key to MTG's next leg higher will be volume in the session that it is able to close above $70.65. The more volume we have on that day, the less likely it is that MTG will roll back over. Traders may wish to time new entries with a close above $70.65 on volume of at least 600,000 shares. Our stops remain at $66.75 to protect on the downside.

Picked on May 31st @ $70.37
Change Since Picked -0.27
Stop Loss @ $66.75

June 3, 2001

MTG pulled back on Friday after its initial breakout move on Thursday. We are not too worried at this point, but will watch that volume doesn't accelerate any more when the stock drops. Support should be coming in at the $66.80 level and resistance has been established at Friday's high of $70.65. Traders should hold off on MTG until it can close above its neckline of $70 on volume of at least 850,000 shares.

Picked on May 31st @ $70.37
Change Since Picked -1.74
Stop Loss @ $66.75