Morgan Stanley (NYSE: MS) reported fourth-quarter earnings results yesterday morning and the results disappointed investors. The company was expected to report EPS of $0.90 on revenue of $9.44 billion. The actual results showed EPS of $0.80 on revenue of $8.55 billion.
The revenue streams all fell or came in flat with the exception of investment management which was up 7%. Fixed income trading revenue was down 30% and that has been a theme among the banks that have reported this week—lower fixed income trading revenue. Wealth management revenue fell 6% while equity trading revenue and investment banking revenue came in flat.
Looking at the daily chart of Morgan Stanley we see that the stock has been trending lower within the confines of a downward sloped trend channel. The upper rail connects the highs from March to Wednesday. The stock gapped higher on Wednesday as Goldman Sachs beat investor expectations and investors expected the same from Morgan Stanley.
The stock gapped right back down on Thursday after its own earnings results and that means the stock remains within the channel. We also see that the stock was in overbought territory based on the 10-day RSI and the daily stochastic readings. The RSI moved out of overbought territory after Thursday’s decline and the stochastic readings made a bearish crossover.
The financial sector has lagged the overall market over the past year and banking stocks have lagged the financial sector. Morgan Stanley has lagged the overall market, the financial sector, and the banking industry.