Shares of The Walt Disney Company (DIS) moved lower in after-hours trading on Tuesday after the entertainment giant reported worse-than-expected third quarter financial results. The move could lead to a breakdown from the 50-day and 200-day moving averages and a reversal of its intermediate-term trend. Traders should keep a close eye on the stock as it approaches these levels, while long-term investors remain undecided about the future of the company's media network business.

Third quarter revenue fell 0.3% to $14.24 billion – missing consensus estimates by $180 million – while net income of $1.58 per share beat consensus estimates by three cents per share. While the parks division reported solid 12% gains, the media network business was a drag on revenue with a 1% decline. Investors have become increasingly concerned over the performance of the media segment's flagship ESPN property. (See also: Disney Bulls Hold an Edge Into Earnings.)

Technical chart showing the performance of The Walt Disney Company (DIS) stock

From a technical standpoint, the stock is poised to break down from the 50-day and 200-day moving averages at around $105.95. The relative strength index (RSI) remains neutral at 49.41, but the moving average convergence divergence (MACD) could see a bearish crossover. The bearish crossover of the 50-day and 200-day moving averages could signal the beginning of a new bearish trend in the stock over the intermediate term.

Traders should watch for a breakdown to S1 support at $105.04 or lower trendline support at around $103.00. A further breakdown from these levels could prove to be a technical tipping point for the stock and the start of a long-term downtrend. The next major support lies at around $98.00, which is below the psychologically important $100.00 level. The upshot is that there may be some consolidation around $103.00 before any substantial move lower. (For more, see: Opinion: Disney Has a Wide Moat Around Its Castle.)

Chart courtesy of StockCharts.com. The author holds no position in the stock(s) mentioned except through passively managed index funds.

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