Morgan Stanley Shares Are At A Critical Support Level

In the stock market, some price levels are more important than others. Sometimes the reason for the importance isn’t clear.

The $76.50 level has become important for Morgan Stanley MS.

When the stock reached $76.50 in January, it was a resistance level. The sellers overpowered the buyers and the share price fell to $68 by early February. In this situation, there was no apparent reason why the level was important.

Morgan Stanley's stock then rallied to $84 a share in mid-March. After it formed a peak, shares went lower and then found support at $76.50 on March 29.

This time the reason for the level’s importance was obvious. Levels that were resistance can convert to support. That is what happened here.

See also: Price Over Earnings Overview: Morgan Stanley

A number of the investors who sold at $76.50 in January were glad when it trended lower after. They think they made a good decision.

But after this level broke and the stock traded higher on Feb. 22, many of these investors think they made a mistake. They decide to buy the stock back, but they will only do so if they can get it for the same price they sold it at.

This results in buy orders being placed at a level that had been resistance. If there are enough of these buy orders, the level will turn into support. That is what happened here at the $76.50 level.