Morgan Stanley shares gain for a second session in a row on Wednesday, bank reduces exposure to US stocks, focuses on Europe

January 11, 2018 10:26 am

According to a Wednesday note by Morgan Stanley (MS) strategists, the bank reduced its exposure to the US stock market and focused on European equities, as the recent strong rally observed in the United States suggested rather limited upside in 2018.

Morgan Stanley shares closed higher for a second consecutive trading session on Wednesday. It has also been the sharpest daily surge since January 4th. The stock went up 1.18% ($0.63) to $53.93, after touching an intraday high at $54.48, or a price level not seen since December 27th 2007 ($54.80).

In the week ended on January 7th the shares of the financial holding company added 1.22% to their market value compared to a week ago, which marked the fifth gain out of seven weeks.

The stock has extended its advance to 2.78% so far during the current month, following a 1.67% surge in December. The latter has been a fourth straight month of gains.

For the entire past year, Morgan Stanley shares gained 24.19% following another 32.82% surge in 2016.

The bank’s overweight in European stocks was increased to 3% from 2% relative to the benchmark. At the same time, overweight in US stocks was reduced to 1% from 2%.

“U.S. stocks have outperformed and are now close to our year-end price target with limited upside, while the backdrop for European stocks outperformance is intact”, Morgan Stanley’s strategists wrote in a cross-asset note, cited by Reuters.

Morgan Stanley’s cross-asset strategists continued to prefer equities over fixed-income instruments, as current late cycle environment, in their view, was approaching a “tricky handoff” at the end of the first three months.

Since the beginning of October 2017 the S&P 500 (SPX) has risen 8.7%. In comparison, the European STOXX 600 has achieved a return of 2.6% over the same period.

According to CNN Money, the 26 analysts, offering 12-month forecasts regarding Morgan Stanley’s stock price, have a median target of $54.50, with a high estimate of $69.00 and a low estimate of $40.00. The median estimate is a 1.06% surge compared to the closing price of $53.93 on January 10th.

The same media also reported that 17 out of 30 surveyed investment analysts had rated Morgan Stanley’s stock as “Buy”, while 9 – as “Hold”. On the other hand, 1 analyst had recommended selling the stock.

Daily and Weekly Pivot Levels

With the help of the Camarilla calculation method, today’s levels of importance for the Morgan Stanley stock are presented as follows:

R1 – $54.01
R2 – $54.09
R3 (Range Resistance – Sell) – $54.17
R4 (Long Breakout) – $54.41
R5 (Breakout Target 1) – $54.69
R6 (Breakout Target 2) – $54.81

S1 – $53.85
S2 – $53.77
S3 (Range Support – Buy) – $53.69
S4 (Short Breakout) – $53.45
S5 (Breakout Target 1) – $53.17
S6 (Breakout Target 2) – $53.05

By using the traditional method of calculation, the weekly levels of importance for Morgan Stanley (MS) are presented as follows:

Central Pivot Point – $52.85
R1 – $53.79
R2 – $54.46
R3 – $55.40
R4 – $56.33

S1 – $52.18
S2 – $51.24
S3 – $50.57
S4 – $49.89

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