Detecting stress concentration, especially critical stress state leading to structure damage or failure, is one of the most important tasks of equipment diagnosis. Metal magnetic memory technique needs further research to evaluate stress concentration quantitatively due to ambiguous physical mechanism, though it has potential to detect early defects in ferromagnetic materials. Mild Q235 steel defective specimens in demagnetization state were loaded in tension up to visible necking, with magnetic memory signals measurement made at increasing stress levels. Magnetic signals varied greatly under first several loadings and subsequently tended to stability in the elastic region, which showed that the magnetization always approaches the anhysteretic magnetization curve and was explained by the theory of magnetomechanical effect. In the plastic stage, an abnormal wave occurred in the stress concentration zone and its height value was sensitive to plastic deformation levels and dependent on the distance between the probe and defect, in accordance with the simulation results based on the magnetic dipole model. Different magnetic signal characteristics in the elastic-plastic region indicate that the magnetic memory technique can identify macroyielding and early damage, which is of profound significance for ensuring safe operation of equipment in service.