Morgan Stanley - MS - close: 26.86 change: +0.60

Stop Loss: 25.49
Target(s): 29.85, 31.85
Current Gain/Loss: + 0.0%
Time Frame: 6 to 8 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
The financial sector is starting to show leadership again. While we could buy another bank or an ETF like the XLF, which is on the rise, I want to look at MS. Shares of MS have been consolidating sideways for months and could play catch up once it breaks out from this trend of lower highs. Thus buying MS right now is a little bit aggressive since it has yet to truly breakout but it looks close. Tuesday's close over the 200-dma is a positive step in the right direction. The recent bounce from the 50-dma near $25.50 allows for a clearly defined stop loss.

I am suggesting bullish positions now. Our first target is $29.85. Readers might also want to check out shares of JPM as a bullish candidate since JPM has a very similar pattern.

Open Positions Now @ Current Levels

Suggested Position: Buy MS stock @ current levels

- or -

Buy the 2011 January $27.50 calls (MS1122a27.50) current ask $0.55

- or -

Buy the 2011 April $27 calls (MS1116D27) current ask $1.65

Annotated chart:

Entry on December 22 at $xx.xx
Earnings Date 01/20/11 (unconfirmed)
Average Daily Volume: 12.2 million
Listed on December 21st, 2010