Medium term
Trade view / 14 June 2016 at 9:30 GMT

UPDATE: Downside Disney trade well underway

Trader /
United States
Instrument: DIS:xnys
Price target:
Market price:

Shares of The Walt Disney Company (DIS:xnys) continue feeling heavy and after another failed rally attempt on Monday look to be bear a downward acceleration. I remain with my bearish view for DIS stock to drop into the low $90s.

On May 12 I offered a trade idea in shares of Walt Disney laying out a host of bearish developments on the technical front as the stock can't fight a slowing economy. The stock has since fallen somewhat lower but remains at risk of a better drop off in coming weeks. 

On the multi-year weekly chart, the picture looks as miserable as it did in early May. DIS stock in May rallied into a host of technical resistance levels made up of the 2011 former diagonal support line and the 50-week simple moving average. The stock gapped lower from there and is now seemingly holding on to a thread before likely dropping lower still.

Walt Disney Company

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Source: Saxo Bank

On the daily chart we see that since the initial gap down on May 11, shares of Disney have trickled somewhat lower. Last week the stock broke below its blue 100-day moving average and on Monday June 12 staged a failed rally attempt where this moving average acted as resistance. 

This now gives traders a well-defined area to lean against near the $100-101 area and trade the stock from the short side.

Walt Disney Company
Source: eSignal

Management and risk description

For the quicker traders, any decisive daily close above the $100 area would call off this bearish trade in Disney stock for that could change the near-term momentum/trajectory.


Entry: $99 or lower.

Stop: $101.

Target: $92 as a first downside target.

Time horizon: two to five weeks.

— Edited by Michael McKenna

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Non-independent investment research disclaimer applies. Read more


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