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Two Ways To Play: Morgan a Market Darling


Strengthen your portfolio in good times and bad.


Morgan Stanley (MS) decided to pre-announce earnings after the bell today. Shares took off in after-hours trading after the company reported better-than-expected results for the third quarter. The second-largest US securities firm said earnings came in at $1.32 per share, above analysts' estimates of $0.78 per share. It also reported revenues of $8 billion, above expectations of $6 billion.

CEO John Mack said in a statement:

Despite unprecedented market conditions, Morgan Stanley's core client franchise achieved solid revenue growth, profitability and ROE this quarter. Our people delivered particularly strong performance across our prime brokerage, commodities, foreign exchanged and equities businesses and we saw continued growth in our international business. We have continued to actively reduce our legacy positions and carefully manage our risk, capital and liquidity. I am confident that Morgan Stanley's strong balance sheet and product and geographic diversification leave us well-positioned to serve our clients and realize opportunities in these challenging markets.

Shares traded as high as 9% in the after-hours market.

From the Bull Pen: Could we see temporary relief in the financial sector? Bulls looking for a trade can play the upside using the Ultra Financials (UYG); sell stops can be set below yesterday's close of $19.62.

From the Bear Cave: This week's events have made the financial markets much more challenging - and good news from Morgan certainly doesn't fix the problem. We've talked about Ultrashort financials (SKF) into $100. Bears can consider again the upside in this inverse ETF should the stock approach that level.

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Position in SKF

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