2/8/2017 – Walt Disney (DIS) High Confidence Trade Set-Up
Walt Disney (DIS) High Confidence Trade Set-Up
This article is for the Walt Disney Company (DIS) post-earnings analysis and a high probability trade set-up that I see developing over the next month or two.
After selling all of my mom's shares for DIS about 2 weeks ago now, I have been waiting for a chance to re-enter the trade on her behalf. My main thesis was to purchases shares on a pullback to the 200 Day moving average. Especially since Disney's share price had just developed a Golden Cross on its moving average charts. More on that later in the article.
I still haven't received any member updates on the new Star Wars movie yet. Sparky, where's my review? I have heard though that it did well at the box office and was pretty well received. The Star Wars franchise will always hold a special place in my heart.
With earnings announced yesterday after the market closed, I think the opportunity to jump on Disney's trend is near. There was some initial weakness with the share price in the after-hours market activity last night. And after an attempted rebound during today's trading, the Walt Disney Company (DIS) is a company that should potentially be on your watchlist.
DIS - Post-Earnings Analysis
Three months ago, the Walt Disney Company (DIS) had a lackluster earnings report. The stock rallied on the report up until its most recent one yesterday. Yesterday, DIS had another ho-hum earnings report. They beat on earnings but missed on top-line revenue. That was enough for the share price to see a little selling pressure today.
Actually, without making a new high for the uptrend before beginning to pull back could be an indicator that a consolidation period is underway. If the share price makes a lower low tomorrow, that should further confirm the consolidation.
As Disney's share price has rebounded over the last 3 months, I like how it has moved back above the 50% Retracement Line from the downtrend. If most of DIS's consolidation takes place above the 50% Retracement Line on this chart the probability of a subsequent breakout is increased.
The gray shaded box represents a less risky area to join the current uptrend for DIS share price. The sooner the share price gets to the gray shaded box though, the better the chance any rebound will fail. A quick move to the gray shaded box is most likely only a quick trading opportunity.
For no other reason than a hunch, I think Disney is going to develop a Double Zig-Zag wave pattern during its consolidation. Double Zig-Zag wave patterns are supposed to be kind of confusing with a bunch of volatility. But that volatility will be skewed downwards.
My estimate for the end point of the Double Zig-Zag wave pattern is around the $103.50 area, near the bottom of the gray shaded box.
DIS - Elliott Wave Breakdown
This is a 1 year daily candlestick chart where I've illustrated a potential Bullish Impulse wave pattern for the Walt Disney Company (DIS) during its recent uptrend, including several subdivided waves within Wave 3 of the Bullish Impulse wave. I also illustrated what general shape a Double Zig-Zag wave pattern might look like and just how Disney's share price might get back to its supporting trendline.
Like most Bullish Impulse wave patterns, this one had an extended wave. The extended wave for DIS developed in Wave 3. I show how the extended Wave 3 subdivides with the red trendlines. An extended wave pattern is basically a mini Bullish Impulse wave pattern within that wave. Wave 3 of the red trendlines can even be subdivided into another Bullish Impulse wave pattern, which I did with the blue trendlines.
The same pattern develops and plays out on many levels. And the further that I can subdivide the pattern like I have, the more confidence I have with the wave breakdown.
It is important to have confidence in your wave breakdown. But the great thing about Elliott Waves is that there is always a definite point when you know hen you are wrong. When a pattern makes a print it shouldn't. That is the first indication that your Elliott wave pattern may not be labeled correctly. If my above Elliott wave breakdown for the Walt Disney Company (DIS) is accurate, which I think it is, then…...
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I look at some pullback areas to begin building a position in the stock as well as some of its upside target prices that can be anticipated after your position has been built.
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