MS finds buyers at key support level
Morgan Stanley (MS) Technical Analysis Report for Jan 11, 2019 | by Techniquant Editorial Team
MS finished the week 1.07% higher at 41.74 after gaining $0.08 (0.19%) today on low volume, slightly outperforming the S&P 500 (-0.01%). Trading up to $0.32 lower after the open, the share managed to reverse during the session as bulls took control ending the day above its opening price. Closing within the previous day's range, prices missed to decisively move beyond the prior day's trading range in a lackluster session.
Daily Candlestick Chart (MS as at Jan 11, 2019):
Friday's trading range has been $0.91 (2.2%), that's below the last trading month's daily average range of $1.37. Weekly volatility is also lower, being way below the market's average weekly trading range. The longer-term, monthly volatility is currently significantly lower than usual for MS. Prices continued to consolidate within a tight trading range between 40.96 and 42.41 where it has been caught now for the whole last trading week.
Three candlestick patterns are matching today's price action, the Bullish Short Candle and the White Candle which are both known as bullish patterns and one bearish pattern, the Last Engulfing Top Pattern. The last time a Last Engulfing Top Pattern showed up on January 2nd, MS lost -1.78% on the following trading day.
After trading down to 40.96 earlier during the day, the stock bounced off the key technical support level at 41.08 (S1). The failure to close below the support might increase that levels significance as support going forward. After having been unable to move above 41.96 in the previous session, Morgan Stanley ran into sellers again around the same price level today, failing to move higher than 41.87.
While the market is experiencing a short-term uptrend, this could just be a correction, as both the medium and long-term trends are still bearish.
Buying might speed up should prices move above the nearby swing high at 42.41 where further buy stops could get triggered.
Among the nine market conditions that our pattern recognition engine identified today, the statistics for the OHLC Patterns based market condition "Bullish Short Candle" stand out. Though it is usually interpreted as bullish, it has actually shown to be bearish for Morgan Stanley. Out of 88 times, MS closed lower 62.50% of the time on the next trading day after the market condition occurred. The optimal exit for swing trading this condition on the short side has been after 10 trading days, showing a win rate of 53.41% with an average market move of -0.35%.