• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Bruce Kamich
    • Doug Kass
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • TheStreet Smarts
  1. Home
  2. / Investing

Morgan Stanley Jumps Into the Deep End With E*Trade Purchase

What I suspect is that the stock price of MS will likely trade in a relatively tight range.
By BRUCE KAMICH
Feb 20, 2020 | 09:04 AM EST
Stocks quotes in this article: MS, ETFC

Morgan Stanley (MS) is the 'Stock of the Day' at Real Money on Thursday. The big news today is that MS is buying E*Trade (ETFC) in an all stock purchase valued at $13 billion that is expected to close in Q4. 

Let's check the charts and technical indicators of MS to see how traders and investors are reacting to the news and what chart points we need to be aware of.  

In this daily bar chart of MS, below, we can see that prices have made a recovery rally with the strength in the broad market from early October. MS broke out above the highs of April and May in November and continued higher into January with trading volume getting very heavy at the high.
 
Prices are above the rising 50-day moving average line and the rising 200-day moving average line. Back in early November, we can see that the 50-day average line crossed above the slower-to-react 200-day moving average line for what is commonly called a golden cross. This mechanical buy signal can be effective with long-trending markets. So far in February MS has not made a new high for the move up.
 
The daily On-Balance-Volume (OBV) line moved up from early October to confirm the price gains with its message of aggressive buying but in recent weeks the OBV line has become stalled.
 
The 12-day price momentum study in the lower panel of the chart shows lower highs from October, telling us that the rate of acceleration in price has been slowing and creating a bearish divergence when compared to the price action.  
 
 
In this weekly bar chart of MS, below, see that prices have (so far) stopped short of the prior peak in early 2018 around the $58-$60 area. Prices are above the rising 40-week moving average line but this is a lagging indicator.
 
The weekly OBV line has been moving higher from December 2018 but like the daily chart the line looks like it is stalling.
 
The 12-week price momentum study shows that the pace of the advance has slowed since early January. 
 
 
In this daily Point and Figure chart of MS, below, we can see that prices are in an uptrend with a potential price target in the $64-$65 area. The chart also shows that a trade at $51.53 could turn the chart a bit lower.  
 
 
Bottom line strategy: Analysts will be diving into the books of E*Trade and some may be looking to see if a higher bid may come from someone else. Who knows? What I suspect is that the stock price of MS will likely trade in a relatively tight range. To me the big risk will be the broad market. A serious decline in the broad market in H1 could hit MS and ETFC.
Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

Employees of TheStreet are prohibited from trading individual securities.

TAGS: Mergers and Acquisitions | Investing | Stocks | Technical Analysis | Trading | Banking | Diversified Financials | Financial Services | Brokerages | Stock of the Day

More from Investing

Market Holds Its Own Amid the Chaos

James "Rev Shark" DePorre
Mar 20, 2023 4:53 PM EDT

Let's check the rotation turning under the surface, the likelihood of rate hikes and why investors are scratching their heads over this action.

UBS Tries to Save the Day, but I Would Withdraw From Buying the Bank

Bruce Kamich
Mar 20, 2023 2:56 PM EDT

Is UBS Group AG a white knight or something else? Let's check the charts and take a gut check.

Market's Giving Us a Gut-Check, but Not Necessarily a 2000, 2008 Replay

Brad Ginesin
Mar 20, 2023 2:26 PM EDT

Here's why, despite the unravelling of several major banks, Apple can still be owned and AI is still worth investing in.

Trading Foot Locker Now Comes With a Risk

Bruce Kamich
Mar 20, 2023 2:08 PM EDT

Let's see what the outlook looks like after earnings.

How to Trade China's E-commerce PDD Holdings Now

Bruce Kamich
Mar 20, 2023 1:17 PM EDT

Previously know as Pinduoduo, weak consumer spending has plagued the stock.

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 10:28 AM EDT JAMES "REV SHARK" DEPORRE

    This Weekend on Real Money

    There are exceptions to conventional trading wisdo...
  • 05:43 PM EDT CHRIS VERSACE

    Latest AAP Podcast

    I'm joined by Real Money contributor Peter Tchir a...
  • 08:20 AM EDT PETER TCHIR

    Pre-CPI Thoughts

    I believe the risk to CPI is "asymmetric." It ...
  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2023 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login