The Fast Money guys are hot on the financial sector, with Guy Adami specifically pointing to Morgan Stanley as a valuation play. I, on the other hand, am bearish on the sector and currently short Morgan Stanley.
There is no way a true technician could enter MS from the long side right now. Take a look at the chart. Price, OBV, RSI and stochastics are all trending down. To make matters worse, the current bounce is still under the 200 day moving average, with the shorter term 50 day moving average pointed downward and looking ready to cross below the 200 day. These are all bearish extremely bearish signals that make the current bounce the perfect shorting opportunity.
Hi>>I have to agree with you on the short on MS , and I did see that one guy was long on fast money. The only problem I have with your short position is that ,the stock could easily jump to high 69’s or low 70,s and its still be in a downtrend.The question is a matter of timing I guess. You still might be in a profitable position if there is more pain with the subprime situation.What is your stop on the short? Otherwise I think your thinking is correct as far as the sector goes.Good luck.>>Ron
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Thanks for the comment Ron. I’m using the moving averages as my trend markers. If the stock jumps, and stays, above the 200 day moving average, I’ll cover.