The Walt Disney Company (DIS)

Company

DIS 1-year chart DIS 1-year chart

"The Walt Disney Company, together with its subsidiaries and affiliates, is a leading diversified international family entertainment and media enterprise with four business segments: media networks, parks and resorts, studio entertainment and consumer products. Disney is a Dow 30 company, had annual revenues of over $34 billion in its most recent fiscal year, and a market capitalization of $71.7 billion as of April 30, 2007." (company website)

DIS 6-month chart
DIS 6-month chart

Buy

In the Feb/Mar market correction, Disney pulled way back from its 52-week high of January, broke through the 52-week moving average, and stretched the lower Bollinger band down. Since then it has recovered nicely and is poised to break through to new highs. Earnings are due out next week, and ordinarily I would not buy a stock just before earnings, but Disney has exceeded expectations for the past seven consecutive quarters, so my fears are allayed somewhat.

  • Price momentum (PPO) — accelerating steadily
  • Trend (ADX) — strengthening after a long decline, although still below the threshhold (20)
  • Relative strength (RSI) — flirted with weakness, but now strengthening steadily
  • Volume — heavily traded, with a daily volume over 9 million shares

Based on technical analysis, MarketEdge calls DIS a "buy" in a "weak upward trend."

Sell

gain Bottom line
1%

The Market was unimpressed by Disney's earnings beating Expectations, and apparently the box-office numbers from the release this past weekend of Pirates of the Caribbean wasn't encouraging either. Although DIS set a new 52-week high after I bought, relative strength (RSI) and momentum (PPO) turned sharply down last week, and what seems most likely to me right now is a test of support at the 50-day moving average. Since May is the time when traders supposedly "walk away" I decided to pull to the sidelines rather than wait to see what happens.