Morgan Stanley Says Sell

Here's a strange call coming from Morgan Stanley:

NEW YORK (MarketWatch) -- Morgan Stanley has issued a "full house sell signal" as of Monday, saying three of its leading indicators - bond yields, Institute for Supply Management new orders, as well as valuation and risk - showed it was time to sell. "Such a full house sell signal across these three indicators is rare, and has occurred only five times since 1980," said analyst Teun Draaisma in a European strategy research report. "Equities have always been down in the next 6 months, on average by 15%. Previous occasions include September 1987 and April 2002. We prefer to be on the right side of those odds." Draaisma also said that cautious sentiment can negate a valuation sell signal.

Another Article here:
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/06/06/cnmorgan106.xml

"Investors are taking far too much comfort from global liquidity. Markets always return to fundamental value, so people could be in for a rude awakening. This is the greater fool theory," he said. "The trigger may be rate rises by the Bank of Japan, or a widening of credit spreads. There are lots of little triggers."

Or maybe the trigger is Morgan Stanley telling it's clients to sell.

Edited 1 time(s). Last edit at 06/06/2007 09:44AM by RodgerRafter.