MS closes below its opening price unable to hold early session gains
Morgan Stanley (MS) Technical Analysis Report for May 22, 2020 | by Techniquant Editorial Team
Moving lower for the 2nd day in a row, MS finished the week 7.62% higher at 40.13 after edging lower $0.17 (-0.42%) today on low volume, underperforming the S&P 500 (0.24%) ahead of tomorrow's Memorial Day market holiday. Trading $0.31 higher after the open, the share was unable to hold its gains as the bears took control ending the day below its opening price. The last time this happened on Tuesday, MS actually gained 4.40% on the following trading day. Closing within the prior day's range, prices failed to decisively move beyond the previous day's trading range in a lackluster session.
Daily Candlestick Chart (MS as at May 22, 2020):
Friday's trading range has been $0.74 (1.84%), that's far below the last trading month's daily average range of $1.28. Weekly volatility is also lower, being below the market's average weekly trading range. The longer-term, monthly volatility is currently slightly lower than usual for MS. Prices continued to consolidate within a tight trading range between 39.80 and 41.25 where it has been caught now for the last three trading days.
One bearish candlestick pattern matches today's price action, the Bearish Spinning Top.
The stock found buyers again today around 39.80 for the third trading day in a row after having found demand at 39.84 in the prior session and at 40.04 two days ago.
Though still in a long-term downtrend, the short and medium-term trends both turned bullish already.
Buying could accelerate should prices move above the close-by swing high at 41.25 where further buy stops might get triggered. Further buying could move prices higher should the market test April's nearby high at 41.85.
Among the six market conditions that our pattern recognition engine identified today, the statistics for the Price Action based market condition "Bearish Intraday Reversal" stand out. Although it is usually interpreted as bearish, it has actually shown to be bullish for Morgan Stanley. Out of 386 times, MS closed higher 51.55% of the time on the next trading day after the market condition occurred. The optimal exit for swing trading this condition on the long side has been after 10 trading days, showing a win rate of 56.48% with an average market move of 0.69%.