Chart of the Day: Morgan Stanley Pulls Back to Support
This big financial firm is in a good spot to be accumulated.
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There is absolutely nothing wrong with a modest pullback following a torrid run higher. Such is the case for Morgan Stanley MS, which is just finishing off a modest 4% pullback on fairly low turnover. That is what you like to see after a strong run.
The stock was up nearly 20% from mid-April to mid-May, an astounding move for a large-cap bank. The entire group was strong, however, and with a leader such as MS carrying the load it should come as no surprise. However, buyers get exhausted and sellers do come out on occasion. That is what happened over the past eight sessions.
The technical indicators have rolled over as you might expect in a corrective phase. Moving Average Convergence Divergence (MACD) is currently on a sell signal but stochastics (momentum, pane 4) are very oversold here and about to turn upward.
Money flow remains strong too, and that simply means big money remains in MS and continues to buy. In the top pane, MS has fallen to the 14 day McGinley line, often a spot where stocks bounce after a quick move down.
We like Morgan Stanley and rate it a Two in TheStreet Pro Portfolio, meaning "stockpile on pullbacks." This look like one of those times!
At the time of publication, TheStreet Pro Portfolio was long MS.
