DIS Stock: Compilation of Indications Supports a Bullish Outcome
Walt Disney Co (NYSE:DIS) stock surged by 2.86% on July 27, solidifying that a number of important levels of price support have held. Holding above these levels was no easy task and the way it was accomplished is suggesting that the bull market in Disney stock is alive and well. Therefore, it is only a matter of time before DIS stock is setting new highs once again.
Yes, I am sure this is a bold statement to make, but I have the inclination to believe that such a scenario is on the table and ready to play out. These strong bullish beliefs are based on Disney’s price action and the alignment of its underlying indicators.
This is not my first go-around with this investment, it is one of many publications in which I outline where I believed the DIS stock price was heading next. In my previous report titled “It’s Make It or Break It Time for Disney Stock” that was published on June 13, 2017, I outlined that Disney stock was testing a number of critical levels of price support. This test of price support was accompanied by a number of technical indicators that were in bullish alignment, so therefore, I had the inclination to believe that these levels of price support would hold and a bounce would ensue. Since that publication, DIS stock has appreciated, price support has held, and a rally has ensued. This reaffirms that all is still going according to plan, which is a bull market in development.
The following Disney stock chart illustrates the price action and underlying indicators that continue to suggest that stock prices are set to appreciate.
Chart courtesy of StockCharts.com
This DIS stock chart illustrates a bullish trend that has been in development since the aftermath of the financial crisis. This bullish trend is in its ninth year of development and is easily captured using two parallel upward-sloping trend lines. The picture it creates is referred to as an “ascending channel.”
These trend lines represent levels of price support and price resistance, and since the beginning of this bullish advance, the share price has been oscillating in between them. I have stated on numerous occasions that as long as the share price is contained within this channel, the bull market that began in 2009 will continue to forge on.
Support outlined by the ascending channel was just tested and that level held, suggesting that higher prices are now likely to follow. This bullish outlook is being supported by the indicator located in the lower panel labeled “MACD.”
MACD is an acronym for moving average convergence/divergence, and this indicator is used to distinguish between bullish and bearish momentum. A bullish MACD cross suggests that bullish momentum is influencing the stock price while a bearish cross suggests that bearish momentum is influencing the stock price. In order to stage a stock price advance, bullish momentum is a required.
In 2012, a bullish MACD cross was generated after price support outlined by the ascending channel was tested. Following this indication, Disney stock appreciated by 202.56% until resistance outlined by the ascending channel was met. Earlier this year, a bullish MACD cross was generated and a bullish outcome is now expected.
While price support was being tested, the MACD indicator remained in bullish alignment, implying that the stock was still geared towards higher stock prices.
The following Disney stock chart illustrates the price action and underlying indicator that reaffirms the view that the stock price is geared towards higher prices.
Chart courtesy of StockCharts.com
This DIS stock chart illustrates the breakout that was responsible for generating my bullish view on this investment in the first place. This breakout occurred in November 2016, when Disney shares finally gathered enough strength to break above a downtrend line that was preventing the stock price from advancing.
This downtrend line defined the bear market that pressured this investment, and breaking above it suggested that this bearish trend had finally concluded, implying that a new bullish trend was in the making.
Shortly after the breakout, the 50-day moving average crossed above the 200-day moving average, generating a golden cross. A golden cross implies that a new bull market is in development, which reinforces the bullish view that was generated by the breakout.
In the months that followed, Disney’s share price went on to hit a high of $115.61, justifying the bullish implications suggested by indicators that preceded. After this high was hit, a steep correction ensued and the stock price proceeded to test the 200-day moving average. The 200-day moving average just so happens to coincide with price support outlined by the ascending channel.
The 200-day moving average acts as a dividing line that separates healthy bullish investments from unhealthy bearish investments. Distinguishing between these two polar opposites is quite easy, because a stock trading above the moving average is bullish, while one trading below it is bearish.
DIS stock found support at the 200-day moving average, and the stock price has begun to appreciate. The timing of this advance could not have been better because the moving averages that generated the golden cross were converging, and in order to avoid generating a bearish cross, the stock price needed to appreciate. The appreciation in the stock price has kept these moving averages in bullish alignment, supporting the notion that further gains are now in the cards.
Bottom Line on Disney Stock
Disney stock tested important levels of price support, and while this was occurring, a number of indications remained in bullish alignment, supporting the notion that a bull market in DIS stock is still alive and well. Therefore higher stock prices can now be expected to follow.