Disney Breaks Out From Prior Highs in Volatile Session

Shares of The Walt Disney Company (DIS) rose more than 3% during Wednesday's session after moving lower in pre-market hours. The stock is reacting to AT&T Inc.'s (T) win in its antitrust case, which paves the way for its $80 billion-plus buyout of Time Warner Inc. (TWX) and sets a key precedent moving forward.

The antitrust decision clears the way for competing bids for Twenty-First Century Fox, Inc.'s (FOXA) media assets from Comcast Corporation (CMCSA) and Disney. Comcast is expected to make a $60 billion-plus bid for the assets on Wednesday afternoon, sending its shares lower, and this could discourage Disney from making an even higher bid, sending its shares higher. The potential bidding war between Comcast and Disney could drive the share price of both companies over the coming week. Meanwhile, Fox shares could continue to appreciate in the aftermath of the antitrust decision and these competing bids. (See also: Fox Stock Jumps as Comcast, Disney Bidding War Expected.)

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

From a technical standpoint, Disney shares broke out from prior highs of around $105.00 made back in mid-May toward R2 resistance at $108.69. The relative strength index (RSI) just surpassed overbought levels at 70.89, but the moving average convergence divergence (MACD) experienced a bullish crossover above the zero line. These indicators suggest that the stock could see some near-term consolidation before moving higher.

Traders should watch for a breakout from R2 resistance at $108.69 to reaction highs at around $110.00 over the coming sessions. However, the stock may consolidate just below R2 resistance before making such a move given the lofty RSI reading. If the stock breaks down below trendline support, traders could see a move to R1 resistance at $104.08 or the 200-day moving average at $102.87. (For additional analysis of Disney stock, check out: Disney Is Rising Along Its Reversion to the Mean.)

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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