Chart of the Day: Will Earnings Change the Game for Morgan Stanley?
A huge week of earnings from the banks/financials awaits.
Morgan Stanley ($MS) will deliver results for its recently completed third quarter Wednesday, and many suspect there will be plenty of holes in the report. No doubt the exception will be investment banking, which seems to have slowed down but may start to pick up in the new year.
With two of the indices at/near all-time highs one might expect clients of Morgan Stanley to feel pretty good about their portfolios and continue to drive stock purchases. Further, a nice increase in bond yields likely is pushing investors to buy more bonds, always a profitable business for MS.
On the whole, MS stock has been beaten down badly but continues to firmly hold the $190 level. MACD looks close to rallying and crossing over for a bull signal, and money flow started moving higher again. Relative strength is poor, which is no surprise because the rest of the group is ailing. The XLF (ETF for financials) is in a severe downtrend.
We will be looking for clues in the earnings call from Morgan Stanley this week, hoping they see a bright side to their business for the last quarter of the year. And no question they will respond to other banks that report this week including Goldman Sachs ($GS), JPMorgan Chase ($JPM) and Bank of America ($BAC).
Morgan Stanley has been a very reliable earnings grower in the past. We are looking for some upside beyond $200 this month and if so, new highs likely won’t be far off.
We like Morgan Stanley in TheStreet Pro Portfolio and rate it a Two, or “stockpile on pullbacks.”
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At the time of publication, TheStreet Pro Portfolio was long MS and BAC.
