MS, Morgan Stanley post script

ms may 21 2012

Further to our recent blog on MS, there is a 3/4 year support line that may hold the stock. Technical analysts of all stripes use rulers to figure out where stocks might, or might not, move. A simple line is often all it needs. The logic is equally simple, you buy above the line in the hope that it goes higher, you sell below the line on a break. In this case the latter option is less attractive given the already depressed value. You do have to give these guys credit for pricing the FB initial public offering, just about right, something we had not seen for ages which , no doubt, caused a surprise and disappointment.

Again it looks like this stock may well be a buy here, if only for a trade of $6/7. See previous blog. All we need is QE3 and the Atlanta Fed guy is already paving the way.

MS, Morgan Stanley update

Like Discount Corp. (now defunct) Morgan Stanley was created as a means to circumvent Glass-Stegall. It is a spin-off of JP Morgan. Now, of course, it is legally also a bank but  no doubt that can be changed back with the same speed as it was done in 2009. Apart from GS this is the only other remaining big gambling casino, but without the bad reputation or the over-sized rolodex. Here are the charts;

MS may 2012

This is a little different from the last blog. With all due respect to the Gainesville gang, it would seem to me that this chart looks a lot like GE and that it is conceivable that MS has done the entire correction! Alternatively, as shown before and in the chart below, we are still in some 5th wave, in fact the 5th of the 5th. The large A-B-C down is almost perfect, starting at about $100 and going to $10. The pattern is very symmetric.

ms s may 2012

Supposing we are in a 5th of some sort, waves 1 and 5 would be equal at about $9, just $3/$4 from where we are now. (probable 3 of 5 of 5). The stock trades at a p/e of 20 but that is meaningless. We caught the $11 to $21 move correctly but did not execute well. This time there is a chance of doing both. For the moment this should be a buy at $9 for sure but for the more courageous perhaps already, if, for instance, this is a b-wave almost complete. Perhaps, once again, their will be a stream of talent flowing from JPM to MS. The RSI and MACD certainly suggest a change is in the air. Below is that comparison in a chart, MS in green and GE in blue.

ms ge may 2012

Click on the chart to enlarge, one dropped from 100 to 10, the other from 60 to 6. MS is more volatile as would be expected when compared to industrial turbines and so on, but by and large, the correlation is inescapable.

MS, Morgan Stanley, brilliant idea–terrible execution!

ms dec 19 2011

This chart is from our December 19 , 2011 blog. It shows the two possible outcomes that could reasonable be expected at that time. Before that we had tried to buy the stock but had chosen a level that was just a little bit too low and was never reached. Here is what happened;

ms may 9

As you can see,the stock went exactly to one of the two targets, the preferred one given the valuation, at just over $21. But that does nothing for you if you are not in the game. Being reckless is not good but being too cautious is not very helpful either. So where now?

ms b may 8 2012

The best guess at this point in time is hat the stock is making a very large A-B-C correction from the $70 high. In this case the structure should unfold as a 5-3-5 A-B-C. Very often, but certainly not always, both legs will tend towards vector equality which essentially means that the longer it takes the smaller the amplitude. The purple arrows give a rough idea how this might play out. It targets about $8 or so and should take another 6 months to complete. Rumblings that Moody is contemplating a credit downgrade, by no less that 3 notches, may precipitate the process. As always , time will tell but we missed an easy double.

MS, Morgan Stanley update

ms jan 2012

We have followed this stock actively. It has taken 3 1/2 months for this particular pattern to run its course. The top of c is at $17.50 and the stock made a high of $16.94 today. Clearly there is little room to the upside if this scenario is correct.