Morgan Stanley’s 3-Alarm Sell Signal

June 7th, 2007

HA! A “full house” triple Magic-8 Ball alarm! I wonder if this announcement was accompanied by a loud klaxon and flashing red lights? I need my old Quake 2 sound board: “IMPRESSIVE.”

Via: Business Week:

There have been a number of bearish analyst calls on stocks amid the recent global stock rally, but it took a three-alarm warning from Morgan Stanley (MS) on European equities to catch investors’ attention. The note, which was released June 4 but didn’t seem to attract the market’s attention until June 6, helped spark a big sell-off during the European session and also contributed to big declines on Wall Street, with the Dow Jones industrial average down over 150 points at one point. The Nasdaq and S&P 500 indexes were both off about 1% in afternoon trading.

Indeed, major European indexes, buffeted by interest rate worries after the European Central Bank raised its benchmark interest rate by a quarter point to 4% on June 6, took a big hit. London’s FTSE 100 index fell 1.7%, as did the CAC-40 index in Paris. The Dax index in Frankfurt suffered the worst damage on the day, falling 2.4%.

What caused all the fuss? In the note from the firm’s chief European equity strategist Teun Draaisma and other Morgan Stanley staff analysts, the company issued a “Full House” sell signal on European equities. “[W]e now have a tactical sell signal as rates are rising and hitting critical levels.” The firm pointed to signals from three indicators: A fundamentals indicator, which tripped because of higher bond yields and higher new orders from manufacturers in the U.S, and existing sell signals on its valuation and risk indicators.

Posted in Economy | Top Of Page

2 Responses to “Morgan Stanley’s 3-Alarm Sell Signal”

  1. George Kenney says:

    THEY ARE COMING TO GET YOU

    As soon as the market finishes crashing, China will buy it all up cheap. BHP is one of the crown jewels of Australia and China wants to buy it.

    http://www.news.com.au/heraldsun/story/0,21985,21861872-664,00.html?from=public_rss

    Did you know that the Chinese have enough money to buy controlling interest in ALL the companies that make up the DOW JONES INDUSTRIAL AVERAGE?

    http://www.freerepublic.com/focus/f-news/1841687/posts

    If the US stock market falls 50%, they could BUY THEM ALL with their spare cash we gave them in exchange for piles of junk from WALMART.

    Americans are so stupid; they deserve to be broke, chipped and carrying REAL ID cards issued by president Giuliani. Retards.

  2. Former says:

    “Indeed, major European indexes, buffeted by interest rate worries after the European Central Bank raised its benchmark interest rate by a quarter point to 4% on June 6, took a big hit. London’s FTSE 100 index fell 1.7%, as did the CAC-40 index in Paris. The Dax index in Frankfurt suffered the worst damage on the day, falling 2.4%.”

    Humiliation!

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