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Morgan Stanley - (MS) - October 4, 2023

Caught between the negative impacts of rising interest rates and falling stock and bond markets, investment banks like Morgan Stanley (MS) have been struggling in the relative strength rankings this year. MS, for example, exited the green zone of the SIA S&P 100 Index Report back in April and spent the summer bouncing along the boundary between the yellow zone and the Red Unfavored Zone. In the last month, MS has dropped 9 spots to 59th place.

There are few financials left in the Green Zone as potential replacements, only Berkshire Hathaway (BRK.B). A major breakdown is underway in Morgan Stanley (MS) shares. The investment bank has not been above $100.00 but the formation of a symmetrical triangle of higher lows and lower highs suggested that that the stock was in a consolidation phase. Since the beginning of this year, however, steepening resistance lines have suggested that distribution was intensifying. In the last few days, the shares have decisively broken down, snapping an uptrend support line, causing the triangle to fail, and then taking out a horizontal support line at $80.00 yesterday to confirm the start of a new downtrend.

Previous lows suggest potential downside support levels on trend may appear near $72.50, then $69.00, and $62.50 on trend. Initial rebound resistance appears at the recent breakdown point near $85.00.

Morgan Stanley (MS) soared up out of the 2020 market bottom and extended its rally through 2021, but since peaking in February of 2022, it has generally been trending sideways. Back in August, the shares peaked at another lower high and have been under distribution in recent weeks. Moving into October, MS has decisively broken down, completing bearish Double Bottom and Spread Double Bottom breakdowns to signal the start of a new downleg.

Initial downside support may appear at a retest of the July 2022 low near $69.35, followed by $66.65, where a horizontal count converges with a long-term 45-degree uptrend support line. Initial resistance on a bounce appears near $84.50 based on a 3-box reversal.

With its bearish SMAX score falling to 3, MS is exhibiting weakness against the asset classes.

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