Chart of the Day: Morgan Stanley Can't Escape the Vice Grip of the Bear
A corrective move in the stock is evident but might lead to more downside..
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A tough market condition has permeated all of the best-performing groups of 2024, including the financials. Morgan Stanley MS, which is one of the premiere investment banks in the world, has had a rough month. Reaching new highs in early February the stock could not break the ceiling of $140 and simply fell apart that month under some duress. Heavy volume selling indicates distribution by large investors.
The stock is now down about 20% from the highs, the technical definition of a bear market. We don't really pay attention to those labels with stocks when the market volatility is on the rise. The VIX has risen about 10% in six weeks time, and stocks like Morgan Stanley are not going to rise in those conditions.
The technicals show the stock is pretty well oversold, so a rally could ensue in short order. However, the moving averages above make for strong resistance. MS just closed below the 200-day moving average for first time in months.
The stock is in a downtrend channel of lower highs, lower lows. The parabolic SAR is heading lower (bearish, dots in the top chart), money flow is weak and stochastics are down.
The best we can hope for here is the stock finds a bottom and moves sideways for four to six weeks, settles down and starts a run higher during next earnings season. But that is the optimistic case.
We like Morgan Stanley overall and rate it a Two, or "stockpile on pullbacks."
At the time of publication, TheStreet Pro Portfolio was long MS.
