The Walt Disney Company (DIS) has been a turnaround story for 2018. This turnaround began with its earnings report released on Feb. 6. After a pop higher the next day, Disney bears pushed the stock lower, and the 2018 bottom was not set until the May 3 low of $97.68. Disney bulls took over with the stock at and below $100 per share.
On May 8, the Mouse House reported its second consecutive earnings turnaround, and once the stock surged above its 200-day simple moving average of $103.10 on June 8, shares of Disney were finally worth owning again for the longer term. Disney shares closed Monday, Aug. 6, at $115.94, up 7.8% year to date, after setting a 2018 intraday high at $116.84. The stock is up a solid 18.7% since setting its 2018 low of $97.68 on May 3.
Disney reports earnings after the closing bell on Tuesday, Aug. 7, and analysts expect the media giant to post earnings per share between $1.97 and $2.02. Most analysts are optimistic that Disney's buyout of assets of Twenty-First Century Fox, Inc. (FOXA) will help drive new content growth. This $71 billion deal has been approved by shareholders but requires global regulatory approval. ESPN has lessened as a factor given growth in the streaming sports service ESPN+. Bank of America Corporation (BAC) has a buy rating on Disney stock with a $144 price target. My proprietary analytics show semiannual and annual risky levels of $122.89 and $127.69, respectively. (See also: Disney Stock Could Hit $150 After 3-Year Triangle Breakout.)
The daily chart for Disney
The daily chart shows the formation of a "golden cross" on July 16, when the stock closed at $110.20. A "golden cross" occurs when the 50-day simple moving average rising above the 200-day simple moving average to indicate that higher prices lie ahead. My weekly pivot is $115.37, with my quarterly and monthly value levels at $109.48 and $106.63, respectively.
The weekly chart for Disney
The weekly chart for Disney is positive, with the stock above its five-week modified moving average of $110.45. The stock is also above its 200-week simple moving average, or "reversion to the mean," now at $103.41. Note that Disney has been moving higher tracking this moving average since the week of Feb. 9, when the average was $100.92. My semiannual and annual risky levels are $122.89 and $127.69, respectively. The 12 x 3 x 3 weekly slow stochastic reading is expected to rise to 84.95, up from 81.05 on Aug. 3.
Given these charts and analysis, my trading strategy is to buy Disney shares on weakness to my quarterly and monthly value levels of $109.48 and $106.63, respectively, and reduce holdings on strength to my semiannual and annual risky levels of $122.89 and $127.69, respectively. (For more, see: Investors May Not Want to Buy Disney Just Yet: WSJ.)