Morgan Stanley Shares Have More Work To Do To Convert The Bears

Morgan Stanley MS shares have rallied nicely off of the lows, but not nicely enough in many bears' opinions.

The relative weakness being displayed right now in Morgan Stanley is quite conspicuous. This weakness is forcing investors and traders to try to play out all the potential market scenarios - for bonds, commodities and equities - to help project whether shares will flourish or suffer going forward.

Let's take a peak at the fundamentals and technicals in Morgan Stanley.

What The Bulls See

• Some cheap valuation metrics: A PE of 12 that seems reasonable given the 2015 expectations for EPS growth of more than 20 percent, a price-to-book ratio of 1.02 and a price-to-sales ratio of 1.96.
• 15.18 percent net profit margins.
• $602 billion in cash equivalents versus $368 billion in total debt.
• An annual dividend rate of 1.2 percent.

What The Bears See

• A debt-to-equity ratio of more than 500 percent.
• A technically “laggy” stock that hints at more difficulties to come (at this point).

The Technical Take

Technicians note that Morgan Stanley shares have recaptured the broken uptrend line with the rally of the last two weeks, a bullish development. Now the chore for shares is to maintain its more bullish posture above that line and to build on recent gains. Initial support for the stock comes in at $33.40 and is backed up by further support at $31.35. Resistance for the stock comes in at the October 6 high of $35.40.

Morgan Stanley and its brokerage cousins seem to be having to work harder than other companies and sectors to make progress off the recent lows. That being noted, the stock may have a bit more upside left before it becomes a glaring short-sale candidate. Buying aggressively here would be saying that the stock market is going to rip higher in the short-term. The answer is not clear enough for many to pull the trigger on buys in Morgan Stanley at current levels.