MS dominated by bears dragging the market lower throughout the day
Morgan Stanley (MS) Technical Analysis Report for Jul 02, 2020 | by Techniquant Editorial Team
MS finished Thursday at 47.79 gaining $0.18 (0.38%) on low volume, slightly underperforming the S&P 500 (0.45%) ahead of tomorrow's Independence Day OBS market holiday. The bears were in full control today, moving the market lower throughout the whole session. 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 Jul 02, 2020):
Thursday's trading range has been $1.33 (2.72%), that's below the last trading month's daily average range of $1.80. Weekly volatility is also lower, being below the market's average weekly trading range. The longer-term, monthly volatility is currently lower than usual for MS. Prices continued to consolidate within a tight trading range between 46.61 and 49.08 where it has been caught now for the whole last trading week.
During the whole day, prices traded within the previous day's range, unable to trade above the prior day's high or below the previous day's low forming an Inside Bar. Additionally, one bearish candlestick pattern matches today's price action, the Black Candle.
Prices are trading close to the key technical resistance level at 48.68 (R1). After having been unable to move above 49.08 in the prior session, the market ran into sellers again around the same price level today, failing to move higher than 49.03. The last time this happened on June 19th, MS actually gained 0.96% on the following trading day.
Although still in a long-term downtrend, the short and medium-term trends both turned bullish already.
Buying could speed up should prices move above the close-by swing high at 49.08 where further buy stops might get activated. Selling could accelerate should prices move below the nearby swing low at 46.42 where further sell stops might get triggered.
Among the six market conditions that our pattern recognition engine identified today, the statistics for the Support/Resistance based market condition "High close to previous High" stand out. Though it is usually interpreted as bearish, it has actually shown to be bullish for Morgan Stanley. Out of 577 times, MS closed higher 53.21% 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 57.02% with an average market move of 0.83%.