Morgan Stanley Disappoints Shareholders and Analysts

MS will likely see further declines following disappointing earnings.

Morgan Stanley (MS) was known "back in the day" for its swagger under the leadership of John Mack. On Thursday morning the financial services firm reported an EPS and revenue miss and shares were trading lower. Some trading prowess and swagger could be useful now with the stock in a downward trend.

Let's check the charts and indicators. 

In this daily bar chart of MS, below, we can see that prices have tumbled lower this year. Prices found support around $95 in late 2021 but that area turned into resistance when the area was broken on the downside. A rally failure at $95 in March set the stage for further declines. MS is trading below the declining 50-day moving average line and that line has been acting as resistance for several months. The slope of the slower-to-react 200-day line is negative (bearish).

The On-Balance-Volume (OBV) line has been weakening since the middle of February as traders have been more aggressive sellers with heavier trading volume happening on days when the stock has closed lower. The Moving Average Convergence Divergence (MACD) oscillator is bearish but also shows a bullish divergence from March to June.  

 

 

In this weekly Japanese candlestick chart of MS, below, we see a bearish picture. Prices are in a downward trend below the bearish 40-week moving average line. There are no bottom reversal patterns visible. The weekly OBV line is bearish and the MACD oscillator is too. 

 

 

 

In this daily Point and Figure chart of MS, below, we can see that the software is projecting the $60 area as a potential price target. 

 

 

In this weekly Point and Figure chart of MS, below, a $55 price objective is shown. 

 

Bottom line strategy: Traders and investors should avoid the long side of MS as further declines seem likely according to my interpretation of the charts.

 

(Morgan Stanley is a holding in the Action Alerts PLUS member club. Want to be alerted before AAP buys or sells MS? Learn more now.)

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