Boston, MA 10/17/2013 (wallstreetpr) – The turnaround in the housing market looks like of a sustainable kind and the surprising result of MGIC Investment Corp. (NYSE:MTG) points to that firmly. The effect rubbed off on the other mortgage insurers and naturally Radian Group Inc (NYSE:RDN) (Closed: $14.46, Up: 7.67%) turned out to be one of the beneficiaries as it rallied to close on a new 10 week high. It was a straight Marubozu candle, signifying absolute bullish domination. The volume played its role well as it surged to 9 million against an average of 5 million.
The life of the stock till now can be divided into 2 horizontal ranges, divided in the middle by the zone of $17 – $20 level, roughly. The period of 1992 – 1996 was spent on the lower range. Then the golden period of the stock arrived with the bubble of housing starting to get a lot of steam. The bear market of the 1998 – 2000 was unable to dislodge the stock from the higher range and it rallied ever higher to $67.35 by early 2007. The bear market of 2008 changed the scenario forever as the stock crashed in the lower range after trying to make a halt at $15 – $16 for a couple of months. Since then, the entire price action has been stuck in the range of $0.70 to $18.68 and if the stock has to make any meaningful reversal, it has to break that $20 boundary and get into the higher range.
For now, the stock has taken support from the lower boundary of the rising channel containing the entire rally from the 2012 bottom of $2 to the August high of $14.80. It broke out of the consolidation zone made over the last few months and looks all set to reach $16.70 – $17 levels, which coincide with the main resistance. The stock remains a candidate to buy on dips.
