Disney Is Coming Out Of Its Hole

Published 11/28/2016, 02:59 PM
Updated 05/14/2017, 06:45 AM

Walt Disney (NYSE:DIS) stock had a long run higher from a bottom in 2011 to a top in July 2015. During the move higher, the stock went from just over $28 to a peak at $122. That's a 3,355 gain. Not bad for a company that makes the same movie a thousand different times using different animals and lead characters. But that is not really Disney. It was boosted over that run higher by its acquisition of ESPN. And as is often the case, this was also the reason for its price growth to stop and reverse.

A sharp pullback in July 2015 saw a bounce to a slightly lower high in November. This turned out to be a double top as the price fell back, eventually retracing 38.2% of the move higher. The bounce from that lower low met resistance at a lower high and established a down-trending resistance line. 3 weeks ago, the price moved over that falling resistance and kept going. It touched $100 the next week and has been consolidating there with a series of small-body candles since.

Walt Disney

But along with this short-term price action, momentum is swinging to the upside. The RSI on the weekly chart is over the mid line, nearing 60, making a 52-week high. The MACD is doing the same as it rises and is about to cross the zero line. All it needs, now, is for the price to break the consolidation to the upside. This should be confirmed by a close over $100.

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