LeBron James: “I’m Going to DisneyWorld to Kill that Mouse”
- Posted by Greg Harmon
- on June 1st, 2011
What a great time of year. It is warming up. Baseball has started and the NBA and NHL playoffs are in their finals. Pretty soon we will see commercials with LeBron James as the NBA MVP saying ‘I’m Going to Disneyworld!’ If you have not planned your Summer get away yet this might be the perfect place for you to consider too. With the hot weather the lines will probably be shorter and the place less crowded. Don’t believe that, it is always crowed you say? Well the charts for Walt Disney (ticker: $DIS) argue that business is not doing so good. In fact it may be time to short this stock.
The monthly chart shows that the stock has been in a rising channel since the beginning of 2009. But look at the top right and see that it is now pulling back to the bottom of the channel. It is also at a key support area from 2000 at 40.40. But as it sits there the Relative Strength Index (RSI) is pointing lower and the Moving Average Convergence Divergence (MACD) indicator is waning and heading for a negative cross. It is at a critical juncture on this timeframe with poor technicals. Now look at the weekly chart below. This charts shows several touches of support at the 40.40
level but with the last one (a partial week) working on a bearish engulfing candle through that support. The RSI has been trending lower throughout the build of this flag as has the MACD which crossed negative midway through it. This timeframe is also bearish with a continued break being supported by the technical indicators. Finally look at the daily chart below. The flag from the
weekly chart is prominent but on this timeframe you can see that since the day of the big sell volume spike lower, there has been a lower channel within the flag. Also the RSI fell below the mid line into bearish territory on that spike and has failed to get back above it, pointing lower now. The MACD which was improving has stopped and is growing more negative. A bearish picture on this timeframe as well.
The key to a short trade on DIS should be a break and close below Wednesday’s low of 40.32. A stop can be place just above 40.40 and look for some support to come in at 39 and then 38. The weekly chart sees support lower at 36.20 and the monthly at 33.80. A 50% retracement would take it back to 29.50. Whether the beak happens or not will be determined quickly but this trade could play out over a couple of months. Keep your eye on it and strike when it happens.
If you like what you see above sign up for deeper analysis and trading strategy by using the Get Premium button above. As always you can see details of individual charts and more on my StockTwits page.
The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.blog comments powered by Disqus
Gregory W. Harmon CMT, CFA, has traded in the Securities markets since 1986. He has held senior positions including Head of Global Trading, Head of Product Development, Head of Strategy and Director of Equity. (More)
- Thoughts on an Earnings Trade for Amazon
- Premium Earnings 10-23-14
- The Super Dollar’s Next Leg Up
- Listening to the Megaphone in CVS
- Premium Earnings 10-22-14
- Market Musings of a Non-Perma-Bull
- Trust, But Verify: Home Depot
- Dragonfly Capital Views Performance Through October 2014 Expiry
- Premium Earnings 10-21-14
- Calling Hawaii 5-0 to Rescue the S&P 500