The security just pulled back to the historically bullish 40-day moving average
The shares of financial services concern Morgan Stanley (NYSE:MS) are up 1.8% at $86.65 at last check. The security has cooled off considerably since touching a Feb. 10, all-time high of $109.73, and now sits 11.9% lower year-to-date. However, a historically bullish signal now flashing on the charts has MS poised to move back toward toppling resistance at its 2022 breakeven level.
Specifically, Morgan Stanley just came within one standard deviation of its 40-day moving average, after spending some time above this trendline. According to data from Schaeffer's Senior Quantitative Analyst Rocky White, seven similar signals have occurred in the past three years. The security enjoyed a positive return one month later in 86% of those cases, averaging a 4.1% gain. From its current perch, a similar move would put MS over the $90 mark.
A shift in the options pits could go a long way toward giving Morgan Stanley stock the bump it needs. Data at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows the equity sports a 10-day put/call volume ratio of 1.02, which stands higher than 81% of readings from the past year. This means puts are not only outpacing calls, but they've also been getting picked up at a quicker-than-usual clip.
An additional unwinding of pessimism from the brokerage bunch could have bullish implications. While seven analysts still rate MS a "strong buy," six recommend a tepid hold, and the 12-month consensus target price of $95.61 is a 10.7% premium to the equity's current level of trading. In other words, Morgan Stanley stock is primed for a round of upgrades and/or price-target hikes.