Key Moving Average Test Monday

It will be interesting to watch a key technical on multiple bank stocks for Monday. Morgan Stanley and JP Morgan both closed Friday on, or very near, their 50 day moving average. The break above the 50 MA has been widely cited on CNBC, as well as the web as a sign that the financial stocks were going to rally. Monday will prove the first key technical test, to see if they bounce off or break down.

Given trends in two other technical indicators, my guess is they will break down. Both the MACD (8,17,9) and the Slow Stoch (14,5) in MS & JPM have started to trend negative. In MS's case, the MACD divergence has already crossed below 0 to the negative, and the Slow Stoch has crossed below 80. In JPM's case, the MACD divergence declined the past two sessions, and the Slow Stoch has already crossed over it's signal line, and will probably break below 80 on Monday. continued

by Matthew Tansey |  03/23/09  |  Stocks: JPM, MS, XLF,