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Morgan Stanley (MS) To Play Catch-Up

MS looks to move higher, but there's a hurdle in its 50-day simple moving average.


Global banking giant Morgan Stanley (NYSE:MS) has seen its fair share of volatility in the stock price in recent years.  After the large drop in 2007 and 2008, the stock rebounded sharply into the autumn of 2009 along with the rest of the market.  Yet, much like its peer Goldman Sachs (NYSE:GS), the highs from autumn 2009 have since not been recouped.

The stock did, however, develop a nice multi-bottom with its lows in October 2011 and June and July 2012, which led to a re-test of a key down-trend line, which dates back to the aforementioned autumn 2009 highs.  Barring any major breakdowns in the stock, it now looks poised to eventually break past this longer-standing downtrend.

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Closer up on the daily chart of MS, note that the summer 2012 up-trend remains strongly intact.  Any pullbacks, even the most recent one off the stock’s February highs managed to bounce right where they should have.  More specifically, the bounce off the April 19 lows now completed what in the world of technical analysis may be looked at as bull flag formation. As the name suggests, this type of pattern usually resolves to the up-side.

In order for the stock to work back up to its 2013 highs near $24.50, it will first need to clear its 50-day simple moving average, which would also result in the stock breaking out of its bull flag formation.  Upon a successful breakout past the $22.30 area, a first target sits at $23.60, or almost 6% higher, before then potentially moving higher into the February highs.

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Serge Berger is the head trader and investment strategist for The Steady Trader. Sign up for his free weekly newsletter.

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