Chart of the Day: Morgan Stanley Decline Signals Harsh Reality for Big Banks
Earnings are coming up soon but most big banks have been in correction mode.
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We had a bit of worry recently over Morgan Stanley (MS) as it reached new highs but did not push through those levels.
Now, a sideways consolidation or rest period is always appropriate but the recent action in the stock is showing something a bit more bearish. Further, other names like JP Morgan (JPM) , Goldman Sachs (GS) and Citigroup (C) have faltered on some heavier turnover. What does that mean? Basically big institutions are cutting their stakes in the big banks and either moving to other sectors or stepping into bonds, cash or precious metals (or maybe something else).
There have been several days of distribution for MS, which is directly telling us that big money is selling the stock, full stop. Indicators have suddenly rolled over too, the MACD on a sell signal and money flow in a deep nosedive. The price chart is still tentative bullish but that could change soon, a break of that long trendline and the McGinley dynamic was a bearish move.
Can MS right the ship? Definitely it could, but a couple weeks of tight basing is required where the big money is not flowing out at certain price levels.
We like Morgan Stanley and rate it a two, or stockpile on pullbacks.
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At the time of publication, TheStreet Pro Portfolio was long MS.
