TradingMarkets Chart of the Day

For today’s Chart of the Day, let’s take a look at the

Pullbacks From Lows
list published each day on TradingMarkets’
Indicators
page. Most successful momentum-based traders and money managers like to
sell weak stocks after they pull back. TradingMarkets.com uses a proprietary
mathematical model to identify up to 20 (in strong or choppy markets there will
be fewer) weak stocks that have pulled back from recent lows. These stocks
should be considered potential candidates to resume their longer-term
downtrends.

MGIC Investment
(
MTG |
Quote |
Chart |
News |
PowerRating)

has been in a confirmed downtrend, trading below its 200-day moving average
since the beginning of June. On August 10, MTG made multi-year lows after
a steep slide through July. This is a weak stock. After making new
lows at extremely oversold conditions, MTG issued a pullback and is currently
pushing up towards its MA. Watch for this rally to fail as MTG resumes its
downward trend.

Pullbacks rule! Use pullbacks to get a better entry price when
you buy/sell a stock. Use the trend to your advantage as you take
advantage of contra moves.