Join The Mousketeers: Disney Stock On A Tear
Dragonfly Capital | Oct 22, 2013 02:32AM ET
Disney stock (DIS) has been on a tear since it made a bottom during the financial crisis with the market in March 2009. It took the summer off as you can see in this weekly chart, but a little closer analysis of the technical situation shows it was a logical point for it to consolidate some gains. Stocks trade in broad harmonic flows a lot of the time and this stock shows that with the AB=CD pattern over this period. The consolidation beginning in May began at the 138.2% extension of the move from A to B. This is an important Fibonacci level for traders. There are a lot of patterns from this point that we could speculate about going forward. A third move higher in a 3 Drives pattern would target a move over 100 in 2016 if it moved higher now. That is a long way higher and frankly not very useful right now with so much time until the target. It also seems
like a target a Fundamental Analyst would use so lets dig in a bit closer first to see what is more reasonable in the shorter timeframe. The daily chart below shows the consolidation zone zoomed in. The red line of resistance at 67.60 is being tested from below Monday. It has support for a move up through it from the momentum indicators. The RSI is rising in bullish territory and the MACD line (blue one at the bottom) moving higher. These are good things. Also the yellow channel around the price formed by the Bollinger bands is opening higher as the price presses on it. This is also positive. A break of that resistance would carry a conservative target of 81.22 on what is called a Measured Move higher, shown with the
pink dotted line. I like to see multiple forms of Technical Analysis re-enforcing each other though to make a trade. In this case the thin blue line will act as a neckline for a Inverse Head and Shoulders pattern if and when the price breaks through it at about 68. This would carry a price objective of at least 75. So a move over 68 has targets of 75 and then 81.22 before the long term view of over 1000 kicks in. I am starting my application to join the Mickey Mouse Club ready for my accounts.
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