Morgan Stanley has had a strong year in 2025. Shares rose from a low of about $108 in April to a high of around $168 in October, marking a 55% increase over seven months, following a steady upward trend. Recently, however, we’ve seen a “topping tail” in the chart at the October peak. This pattern suggests that selling pressure is starting to outweigh buying interest. Typically, such signs after a big rally indicate that the trend may be slowing down for good rather than just taking a brief break.

Morgan Stanley Shares Trading Analysis

Currently, Morgan Stanley shares are trading at about $162, still above a key trendline. If the price drops below this line, we could see a decline to around $139, which would mean a potential drop of about 14%. A significant increase in trading volume during this downturn would reinforce that a trend change is happening. Given Morgan Stanley’s sensitivity to market conditions, this technical shift could signal potential worries about fourth-quarter trading or revenue. The future direction depends on how the price interacts with the trendline. A bounce back could invalidate this reversal indication, but a drop below the trendline could point to a deeper correction. After a robust seven-month rally, we’re now witnessing signs of weariness in Morgan Stanley’s stock. The failure to hold at the $168 level formed a “topping tail,” indicating strong selling pressure. Right now, we’re monitoring the upward trendline that has supported the stock since April. This year’s rally was driven by a significant rebound in capital markets, with global mergers and acquisitions volume up over 25% year-over-year in the third quarter of 2025. Yet, recent economic data shows a slight slowdown, and the CBOE Volatility Index (VIX) has climbed back above 17 from summer lows. This suggests broader market uncertainty that could affect a key player like Morgan Stanley.

Bearish Strategies and Market Signals

For those predicting a downward trend, a fall below the essential trendline, around $159, would be our signal to act. We might consider buying put options that expire in January 2026, allowing time for the trade to mature. If the stock moves near the $139 target, these positions could become very profitable. A more specific bearish strategy is to employ a bear put spread to reduce initial costs. For instance, we could buy the December $155 put option while also selling the December $140 put option. This setup would profit if Morgan Stanley’s stock decreases, achieving maximum gains if the stock drops below $140 by expiration. On the flip side, if we believe the upward trend will continue, we can sell premium to capitalize on it. Selling a bull put spread with a short strike below the trendline, perhaps at the $155 level, would be an effective strategy. This approach profits if the stock stays above that strike price, allowing us to gain from the stock holding steady. We experienced a similar scenario with Bank of America in early 2022, where a sharp rise ended with a topping formation leading to several months of decline. This historical context highlights the importance of heeding this warning signal. The coming weeks are crucial, and our decisions will hinge on whether that support line holds or breaks. Create your live VT Markets account and start trading now.

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