About the Security (NYSE: DIS)
The Walt Disney Company, together with its subsidiaries and affiliates, is a leading diversified international family entertainment and media enterprise that includes three core business segments: Disney Entertainment, ESPN, Disney Experiences.
Stock background:
After nearly a decade of lacklustre growth, The Walt Disney Company’s profit is forecast to turnaround. The sluggish growth in recent years was largely due to COVID and losses in streaming business. As a result, the Disney stock has underperformed the Consumer Discretionary sector index and the benchmark S&P 500 index since nearly 10 years.
In this regard, the fiscal second quarter perhaps marks a reversal in the stock. Disney beat profit expectations in the results announced in May, led by strong attendance to its theme parks despite continued economic uncertainty. Going forward, strong tourism, optimistic cruise business outlook, and favourable streaming trends could boost operating profit, according to analysts. The stock is now beginning to ‘catch up’ with some of its peers – DIS jumped 26% in the quarter ended June 30, exceeding the sector index’s gain of 10% and the S&P 500 index’s rise of around 11%.
DIS (Daily):
Technical Analysis on The Walt Disney Company (NYSE: DIS)
Our proprietary system TradersGPS (TGPS) has turned Bullish on DIS early May — the first time when the Green arrow appeared after weeks of decline in the stock. Not only on a short-term timeframe, our system has turned Bullish even from a multi-month perspective – both, the daily and the weekly charts, are Bullish. The colour of the candles turned Blue early May, indicating the stock is in an uptrend. As per our system, Blue candles indicate the stock’s trend is up. Red candles indicate the trend is down.
As the monthly candlestick charts show, DIS has consolidated in a sideway channel in recent years. The lower edge of the channel is marked by solid horizontal trendline support around 80, while the upper edge is marked by a horizontal trendline at about 125. The strong rebound in the quarter ended June 30 could be a sign that the stock is gearing up for a bullish breakout. Any break above the resistance at 125 could initially open the way toward 140-142 (the 50% retracement of the 2021-2023 slide), followed by the 2022 high of 160.
The risk is that DIS fails to rise above 125 and in fact turns lower toward support at 80. A break below 80 would be quite bearish for the stock, paving the way toward 55 (the 78.6% retracement of the 2009-2021 rally). On the fundamental side, headwinds remain in place for the media industry which continues to undergo consolidation. Warner Bros. Discovery early June said it will split streaming and studio assets from its global television network businesses.
