Disney Stock is Coming Out of His Hole
- Posted by Greg Harmon
- on November 28th, 2016
Walt Disney stock ($DIS) 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 is a 3355 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 downtrending 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.
But along with this short term price action, momentum is swing to the upside. The RSI on the weekly chart is over the mid line, nearing 60 and 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. At that point you can declare that Micky is no longer just peeking out of his hole, but rather ready to run around and strut his stuff again.
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Gregory W. Harmon CMT, CFA, has traded since 1986 and held senior positions including Head of Global Trading, Head of Product Development, Head of Strategy and Director of Equity. (More)
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