This MS pullback could be a fakeout until the next leg higher
As Wall Street sifts through the red ink this week, long-term signals are sounding left and right. Struggling bank stock Morgan Stanley (NYSE:MS) has one flashing that might be worth a flier for investors keen on rotating out of the volatile tech sector.
MS is now within 3% of its 12-month moving average, after closing above this trendline for the past five months. Per Schaeffer's Senior Quantitative Analyst Rocky White, this signal has occurred 15 times during the last 20 years, after which the stock was higher one month later 80% of the time with an average 3.3% gain. Three months later, MS averaged a 10.6% pop with a 93% win rate.
Morgan Stanley stock is down 3.5% today to trade at $161.72, after the bank giant announced a strategic shift that involved slashing 2,500 jobs. The shares are now 8.9% lower in 2026, stuck in a downtrend since a Jan. 16 record high of $192.68.
Options traders have been betting bearishly. MS' 10-day put/call volume ratio of 1.06 at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) sits higher than 71% of other readings from the past year.
Options are the affordable way to go, too. This is per the equity's Schaeffer's Volatility Index (SVI) of 36% sitting in the 20th percentile of its annual range.