First-quarter earnings of $1.33 per share came in 16 cents per share or 13.6% ahead of expectations. Revenue of $10.29 billion fell 7.1% year-over-year, but came in ahead of consensus estimates by $330 million.
However, the price action following these results may be even more noteworthy. Goldman Sachs (GS - Get Report) , Bank of America (BAC - Get Report) , Wells Fargo (WFC - Get Report) and others were weak after reporting their results, although they have bounced back over the last few days. But for Morgan Stanley, this stock was strong before it reported and is still strong after it reported.
That bodes well for more upside and begs the question, is Morgan Stanley the best bank to buy on earnings?
Trading Morgan Stanley Stock
Of the bank stocks, JPMorgan (JPM - Get Report) and Morgan Stanley look the best. After consolidating for several sessions, JPM stock is pushing higher in just the way we asked for. For Morgan Stanley, more upside is certainly possible. Shares gapped above $46 and held this level as support even though volatility in the sector was picking up. That was a positive sign to begin with, but Wednesday's action is adding to the bullish case.
Although shares are up just 2% on the day, Morgan Stanley stock is above the $47 level, which had been acting as resistance over the past few days. Being above it now opens the gate to $50, even as shares are technically overbought in the short term.
So what now? In trading (and in life), simpler is often better. Below Wednesday's post-earnings low and $47 is a blow to the bulls. Should the stock lose $47 and subsequently $46, the 200-day moving average is on the table. Worth noting is that the 50% retracement for the 52-week range is right near $46.50.If Morgan Stanley stock continues its momentum and can stay above $47, then $50 becomes possible. Don't forget, a year ago MS stock was changing hands at $54, while shares toted a 13-month high of $58. If the banks can retain their recent momentum, more upside could be on the way.
That's as long as yield-curve inversion worries stay at bay and the drumbeat for a recession doesn't grow too loud.