Earlier this month, even when it was at odds with the count, it was worth contemplating whether or not MS was in a (4th wave) triangle. A week has gone by and so far at least, the stock seems to be following the script. All legs in a triangle have to be a-b-c’s, three wave affairs. That , arguable, appears to be the case, or at the very least it could be possible. Also, normally the legs relate to each other by a  factor of 0.62 alternatively, so c should be about 2/3 of a and d 2/3 of b. So far that too is the case. If this were to continue than chances are that we do , in fact , have a triangle. If so we will dive down to about $7 around New Years and then bounce  right back up to $16.5/$19.5  None of this may happen, but if it does you can be prepared by having a great trade for the beginning of next year.

See our previous blogs on this one.

We tried buying at the lows but missed that opportunity. We got close to that point a second time but did not pay much attention. Now there are 2 possibilities. We are making a triangle and will drop like a stone, or we are still in a large “flat”and still have a ways to go to the upside. In my view the first possibility is highly unlikely as it looks like 5 waves were complete and you are so close to rock bottom that plunging now does not make much sense. So I will definitely go for the bull side but do use a stop-loss limit around $13.

A third possibility is that we do actually get a triangle but as a b-wave, that would delay the upward move but would not change the target all that much. By the way, GS is pretty well identical but at a much higher level, so more risky.

Morgan Stanley is, of course, an offspring of the house of JP Moran and Glass-Steagall, one could not possible hope for a better parent than what was then virtually (in the old sense) the Central Bank of the USA. As mentioned earlier, even Bear Sterns ultimately went for $10.

Both MS and GS have recently gone through a rather wild roundtrip. In the vase of Goldman it was up some $30/35 and then back down again. Morgan Stanley did a little less but on a proportionate basis , quite a bit more. Up $8/9 and back down again, almost. Those are like 80% moves, at least on the upside and we almost caught it but unfortunately did not jump on the situation wholeheartedly. MS is now again approaching that $10 level, after moving down in a relatively clean 5-waves. The initial move up looks to be an a-b-c so it is probably counter-trend which does not bode well for the long term. But it is worth remembering that the price paid for Bear Sterns was upped from an original $4 to $10. For a classier outfit like MS that may well be a bottom of sorts. Perhaps we are in a large flat of sorts and we could again double in value in a very short period of time if things go right.

GS is in a similar position but at $87 it is not that obviously at “rock-bottom”.

We missed the boat, recognized this one too late.