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[Scubawarrior]

Larry Swing
President of
MrSwing.com

by Larry Swing - Apr 29, 2004


Analysis:
The financial sector has been under a great deal of pressure recently, as many stocks have fallen ten to twenty percent.  Morgan Stanley (MWD) is amongst the stocks that have been more severely hurt – down ~16.7%.  Meanwhile, the DJ Financial Index is down ~8%, and the DJ Financial Services Index is down ~10%.  However, unlike many declines, this one is apparently not a buying opportunity—financial stocks have shown very little underlying strength as they have fallen; each decline we have watched for a bounce, a suggestion that there exist some investors who believe that the stocks are becoming undervalued.  We have seen no signs of such investors.

Today many financial indices broke below key support levels.  Another small leg down appears likely.
 
For MWD, the situation is worse.  The stock’s decline resulted in the formation of a Head and Shoulders top.  Consolidation over the past several days has resulted in the secondary formation of a bear flag.  In light of these two bearish patterns, the negative technical picture for the financial sector, and our bearish studies of MWD’s volume, we expect significantly lower prices.
 
Key Levels:
 
A break below the low of the bear flag (52.03) is the pivot point for the pattern.  The short level is just below that, at 51.97.
 
The high of the bear flag’s consolidation is 54.72.  A stop slightly above this level would be prudent.  The stop level is 54.76.

The pattern’s target is the pivot point plus the pattern low less the pattern high = 2 * 52.03 – 62.83 = 41.23.  However, noting the strong support level at 42, we choose the target to be 42.26 instead.


Nota: Por acaso não concordo nest ehead and shoulder, encontro outros sinais mais fiáveis como padrao nesta circunstância, até porque par amim em linha de pescoço descendente não há H e S. Há outras coisas mas H e S não.(Cá está como uma memsa coisa pode ser validamente vista de maneira diferente.)