You don't have to be an expert technical analyst to figure out why shares of Morgan Stanley are starting to look bearish -- the setup in this toxic name is pretty straightforward. Shares of MS have been in a textbook uptrend since this past summer, but the most recent test of trend line support got violated, leaving the financial giant's stock below the channel this week.
That's not out of left field -- all trend lines eventually break sooner or later. And while MS' uptrending price action in the channel was a good reason to own shares for most of the last year, the break is a signal for the most risk-averse owners to start selling. Not surprisingly, most trading signals come in shades of gray that synch up with risk tolerance. For the less risk-averse, shares are still very close to trend line support right now; $29 is the last ditch stronghold for buyers. If MS can't catch a bid at $29, then support in the mid-$20s looks like the next likely stopping point.If you decide to go short MS here, I'd recommend keeping a protective stop right at the 50-day moving average. To see this week's trades in action, check out the Toxic Stocks portfolio on Stockpickr. -- Written by Jonas Elmerraji in Baltimore.
Check Out Our Best Services for Investors
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Model portfolio
- Stocks trading below $10
- Intraday trade alerts