The markets may be going haywire and trying to sort out this morning’s CPI report, but investors in Disney (DIS) stock know exactly what to do.
Shares are up about 5% on the day after the company reported better-than-expected earnings.
While the stock may not be trading as high as it was in last night’s after-hours session, let’s not forget that the S&P 500 fell 1.25% at this morning's low and the Nasdaq opened down by about 2%.
Although the indices have rallied, the added volatility has soured the mood on Wall Street a bit.
Despite investors tripping over themselves to sell Netflix (NFLX) on earnings, they are not doing the same thing with Disney. That’s even as shares were up 14% from last month’s low coming into the print.
The company reported record net income from continuing operations, while Disney now boasts 196.4 million subscribers across its streaming portfolio.
No wonder shares are rallying. Let’s look at the chart.
Trading Disney Stock
Chart courtesy of TrendSpider.com
When the company last reported earnings, Disney stock gapped down in November, which started the bearish momentum to the downside.
The stock all but filled the $128.04 gap from November 2020, bottoming at $129.26. From there though, the stock has enjoyed a fairly strong run.
Ahead of the open, I was leery of a big pop in Disney. Not because I don’t like the company or the stock, but because of that big supply zone near $160. Additionally, the January high came into play at $160.32.
Now if Disney can push through $160.32 and give us a monthly-up rotation, it could trigger an even larger upside move. However, following a big pre-earnings rally and nice post-earnings pop, I was hesitant near this area.
Turns out, Disney stock wasn’t able to rally that far anyway.
So now we keep this level on our radar. Above it triggers the monthly-up rotation and puts the recent range high in play near $164. Above that and Disney stock can begin filling the gap from its last post-earnings dip, putting the declining 200-day moving average on the table.
On the downside, keep a close eye on the $150 area.
Not only is it a nice round number, but it’s where the 61.8% retracement of the current range comes into play, as well as the 50-day moving average and the daily VWAP measure.
A break of these measures puts the gap-fill in play at $147.35.
