It’s been an entertaining, adrenaline-pumping breakout year off and on the price chart for Disney (NYSE:DIS). And while the magical ride for investors is likely to continue, it’s time for a technical intermission before bulls pay for admission into a pricey House of Mouse. Let me explain.
If as the saying goes, timing is everything, my late December big thumbs up couldn’t have been any better. Bottom-line and as far as the eye could see off the chart, conditions looked great. From Disney’s 2018 box office exploits, theme park dominance, to its then-imminent acquisition of 20th Century Fox and the company’s Disney+ service and challenge to Netflix (NASDAQ:NFLX) and Amazon (NASDAQ:AMZN) coming online; there were more than a few reasons to embrace the House of Mouse.
And on the weekly DIS stock price chart, support for the big picture after having spent three-plus years on ice — or sitting Frozen — is solid. And DIS stock bulls looked ready for a breakout year in 2019.
Now and with 2019’s ‘Breakout 2’ live on the DIS stock trading screen following news Disney+ will launch on November 12 with a surprisingly aggressive price of $6.99 monthly, it’s time for a technical intermission in the House of Mouse.
Walt Disney Stock Weekly Chart
Truth be told, the original ‘Breakout’ release in early 2019 wasn’t exceptional in its strength. Nonetheless, a move out of the massive triangle congestion pattern did prove to be very well-supported by the forces of good on the DIS stock chart when subsequently challenged; and despite the lack of fanfare.
Now, and after a supportive Hulk-like hand hurtled shares higher in a very non-menacing, three-green candlestick pattern punctuated by last week’s gap move, the Disney’s admission price is technically a bit steep near-term.
Click to Enlarge
There’s certainly been much more aggressively-priced situations in other stocks. But with DIS stock outside the weekly Bollinger Band and shares mostly fulfilling the technical promise of the triangle, I’m anticipating the Hulk-like green action will turn into a more subdued Bruce Banner reaction.
Technically speaking, our Bruce Banner reference would look like a mild-mannered and simple pullback pattern of a couple to several days in duration for Disney shares.
Alternatively, if a deeper retracement in DIS stock was to occur in the coming days or weeks, the 62% level matches up with the Wall Street lore of all price gaps getting filled. Personally, I wouldn’t hold my breath.
If a larger move was to happen, my thoughts are a pullback in-between 38% – 50% would definitely be worth buying admission into the House of Mouse. Still, the reality in DIS stock may play out much differently than expectations.
If shares rocket higher from Monday’s early bid, I wouldn’t chase the move. But if a small technical intermission like our noted simple pattern entry made an appearance in DIS stock — its show time for bullish investors to buy Disney shares once again. Bottom-line though, and to keep the risk of the bad guys from swiftly taking over, I’d simply use a stop-loss below pattern technical support to guard against the curtains coming down permanently.
Disclosure: Investment accounts under Christopher Tyler’s management do not currently own positions in any securities mentioned in this article. The information offered is based upon Christopher Tyler’s observations and strictly intended for educational purposes only; the use of which is the responsibility of the individual. For additional options-based strategies and related musings, follow Chris on Twitter @Options_CAT and StockTwits.
