July 20, 2008
Morgan Stanley (MS) has
been selected as the Stock of the Week for the week
ending August 1, 2008. Thomas H. Kee Jr., Chief
Investment Strategist for Stock Traders Daily, selected
Morgan Stanley after careful evaluation of current
market trends as they relate particularly to the
financial sector. His correlated filters produced
a list of stocks which are poised to move with the
market given these associated forecasting models; MS was
near the top of that list.
Specifically, Morgan Stanley has
recently broken above an important level of longer term
intra-channel resistance. But before that, MS
already tested longer-term support levels. That
test occurred after an extended series of declines of
course. The stock has clearly been in a downward
sloping longer-term channel, but support was tested
perfectly on the 15th of July.
The sudden reversal
after that successful test can be attributed to short
covering, arguably, but that also caused an important
breakout.
An important technical indicator
surfaced during the recent reversal which made Morgan
Stanley compelling for the week ahead. Longer-term
intra-channel resistance had been defined as longer-term
parameter #2 in our real-time trading report for MS.
The breakout that occurred last week propelled Morgan
Stanley beyond that intra-channel resistance level, and
now the stock is poised to continue to increase until
such time as longer-term resistance levels are tested.
Longer-term resistance has been defined as longer-term
parameter #3 in that same report. If MS remains
over longer term parameter #2 it will continue to
increase until such time as longer term parameter #3 is
tested, according to our analysis.
Risk controls are necessary
though. Although the stock is currently positioned
to continue to increase towards longer-term resistance,
which could happen quickly, downside risk provisions
must be taken to control our risk. If MS breaks
back below longer-term parameter #2 instead, which is
now converted longer-term intra-channel support, the
stock will instead be poised to decline back towards
longer-term support levels again. Longer-term
support has been defined as longer-term parameter #1.
If Longer term parameter #2 breaks lower again a decline
back to longer term parameter #1 should take place
instead.
Therefore, longer-term parameter
#2 is a critical level off in inflection. Although
we are using it as a buy signal, it is also being used
as a tool for risk control. Our combined analysis
tells us that higher Market levels are likely too, but
downside protection is mandatory nonetheless.
Short sellers should observe this
inflection point in the opposite way: If MS remains
above longer-term parameter #2 short-sellers should
avoid Morgan Stanley. However, if the stock breaks
back below longer-term parameter #2 again short-sellers
are likely to benefit from the afore-mentioned declines.
in any respect, our real time
trading report for Morgan Stanley offers a series of
important support and resistance parameters which should
effectively guide your trading decisions in the stock
going forward. Refer to longer term parameter #2
specifically; please take the time to review this report
before making any trading decisions. Our real-time
trading report is available to all members and trial
members of stock traders daily.
Click here to sign
up for a Free Trial if you are not a current subscriber:
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Good Trading,
Thomas H. Kee Jr.
Thomas H. Kee Jr.
President and CEO
Stock Traders Daily
http://www.stocktradersdaily.com
1.866.213.2067
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