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Fan Yang

Morgan Stanley (MS) Testing 200-week SMA and Key Support at the $40 Handle

Bank names have been down this year and Morgan Stanley $MS is not exception. Price peaked in March around $59.40 a share, and is now trading just above $40, threatening to break below a key support here.

MS Weekly Chart

(click to enlarge)

Support/Resistance Pivot at $40:
- The weekly chart shows us that the area around $40 was a key support/resistance pivot going back to 2015, when it was a critical resistance.
- Then, in 2017 it became a strong support that launched the move from $40 to $59.40. 
- Furthermore, the 200-week simple moving average (SMA) is right here. 
Strong Support for a Bull market, but...downside to $33.50?
- These are all strong support factors for a bullish market. However, with the bank names general bearish and the general equities market also bearish, I don't think we can rely on support here other than in the very short-term.
- I would limit any upside here to $44, about a 10% rebound.
- Instead, I think there is more than 15% more downside towards $33.50-$33.60 area.
- As we can see on the weekly chart, price will be meeting a previous pivot and a rising trendline if it comes down to this area. 
- Furthermore, the RSI would likely fall back to 30 or below. 
- Then, we can start considering the long-term bull trend. But for now, it looks like the focus is on the medium-term bearish trend of 2018 that will likely spillover into 2019. 

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