The Walt Disney Company (DIS) has been dead money for investors since setting its all-time intraday high of $122.08 on Aug. 4, 2015. The company beat earnings estimates as it almost always does, but guidance was the first showing warnings for its ESPN franchise. The stock has been under a downtrend since then but has been trading around its "reversion to the mean" since the week of Sept. 8, 2017, setting up the potential for a tradeable rally.
Disney stock closed Monday at $102.48, down 4.7% year to date and down 9.5% from its 2018 high of $113.19 set on Jan. 3. The stock was in correction territory when it traded as low as $97.68 on May 3. Thus, Disney shares have already popped by 4.9% going into earnings. Analysts expect Disney to post earnings per share between $1.68 and $1.74 when it reports results after the closing bell on Tuesday, May 8. The company has been doing well lately, with crowded theme parks and two major blockbuster movies. ESPN issues may be a thing of the past, as in reality viewership has been declining since the second quarter of 2011. (See also: Disney's 'Infinity War' Blows Past $1B in Sales.)
The daily chart for Disney
The daily chart shows the choppy random trading pattern that Disney stock has been in over the past 52 weeks. My weekly value level of $96.23 is the horizontal line at the bottom of the chart, and it lines up with the Sept. 7, 2017, low of $96.20. The stock is between its 50-day and 200-day simple moving averages of $101.54 and $103.48, respectively. My monthly and quarterly risky levels are the horizontal lines at $103.63 and $105.47, respectively,
The weekly chart for Disney
The weekly chart for Disney will be positive if the stock ends this week above its five-week modified moving average of $101.56. The stock is also above its 200-week simple moving average and "reversion to the mean" now at $102.17. The 12 x 3 x 3 weekly slow stochastic reading is projected to end the week at 21.22, rising above the oversold threshold of 20.00.
Given these charts and analysis, my trading strategy is to buy Disney shares on weakness to my weekly value level of $96.23 and reduce holdings on strength to my monthly and quarterly risky levels of $103.63 and $105.47, respectively. (For more, check out: Disney Needs Big Quarter to Avoid Breakdown.)