Wednesday, March 31, 2010

Mortgage insurers breakout!!

All the mortgage insurers - RDN, PMI and MTG - broke out today on massive volume!! PMI was up 30% one time today! I had blogged about these stocks earlier these week calling them potential breakouts and marking the crucial levels. I posted about them on twitter in the pre market today saying that they could breakout today. Congratulations to all you readers who made some money off them! If you got in due to my posts, buy me a beer if I am ever in your town :). Just so you know, I am partial towards stouts and IPAs!

Here are the charts. They still look good for some more profits, so I would recommend having them in your watchlist for the next few days. A break of today's highs on good volume should be a good buy  point if you are a momentum trader. If you are a swing trader, a low volume pullback would be a better entry point for you.

I will be back later tonight with some charts that I like for tomorrow.

Take care and good luck!


Monica said...

Well done!!!

And now the question is... what will PMI do in the near future?

It looks very promising, but is it?

Let us know what you think, please.

positiontrader said...

Thanks Monica!

Its hard to tell the future of a stock that has gone up so much so quickly. But this is how I would play it:

Firstly, I would only day trade this stock at this point. Perhaps I am too conservative, but I would not sleep well holding this stock overnight :). I would wait for a break of 5.80 on good volume for an entry with a reasonably tight stop. Another way to play it will be to wait for a low volume pullback to 5 or 4.75 - the immediate support levels. The next resistance is at ~6.20 levels from early 2008.

Hope this helps!

Monica said...

Thank you for sharing!

Considering the after hour sales at the end of last week and the promising recovery sings on jobs, I think the opening next monday will be around 5.8+. After that it depends on the volume, which I believe will be pretty high again and therefore take PMI again to a higher level. Perhaps even above 6.20, directly on monday or during the rest of the week.

Happy Easter

Monica said...

WOW!!! 7.10 close on monday...

What can we expect futher?

positiontrader said...

I wish I knew!! I would be lying if I said I expected it to go this high. Some consolidation would be good here. But here is what you could do. Pay close attention to the volume on any pullback. This should provide you with a clue to where this is headed.