The Mouse is coming out of its hole – Disney

• Posted by Greg Harmon
• on March 3rd, 2016

Walt Disney ($DIS) has been a stock covered with controversy. There has been uncertainty about the movie slate. And a ton of discussion of why ESPN may be a drag on the company. Somehow they continue to print money every quarter. Maybe the controversy is just jealousy?

More important to me has been the movement in the stock price. the chart below shows that there has been a lot of movement, in a broad range from 90 to 120. Is this a topping after a long run to the upside? Maybe. Or it might be a digestive pause before the next leg higher. But either way in the intermediate term the stock looks like a buy.

It all started with a fall with the market in August. The weak bounce in September followed by a pullback to a higher low led to a run higher to the top of the range in November. This completed a bearish Bat harmonic. And it worked really well. From November it retraced 113% of the pattern before finding a bottom in February.

The price action since January has been consolidative, finding resistance at 97 several times as it morphed from a downtrend to a sideways action. This week started a breakout over that resistance. It is also over the 50 day SMA now for the first time since December. There is support for more upside from a rising RSI, now on the edge of the bullish zone, and a MACD that is rising and crossing into positive territory. Translation: Momentum is in favor of higher prices.

Watch the gap from 103 to 105 to possibly stall the upside, but through that 114 to 116 is the next area and then the top of the range at 120. A move over 120 would be long term bullish. But lets see how far Mickey can run out of his hole first.

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