For our equity and CFD friends out there, we see a longer-term technical setup hits the watchlist this week this time on Disney (DIS).
We saw a lot of pain for DIS bulls in 2021, so will bulls take back control in 2022?
Disney (DIS) Ready to Return to the Uptrend?
With no major events expected this week, and a low probability that traders will make big moves before the end of the year, we’re taking a step back to the higher time frames for potential opportunities to watch in 2022.
And for today, we’re checking out the price action in Disney (DIS), which has taken a near -30% dip since hitting all-time highs at $200 back in Q1 2021. A chunk of this hit came recently in November, after Disney posted FY Q4 2021 earnings numbers that didn’t mean analyst expectations.
Now trading around the $150 major psychological handle, the price action is making several arguments that may draw in technical bulls. First, the sell-off seems to have run out of steam according to the weekly stochastic, which is now rising out of the oversold signal.
And this is occurring not only at a major psychological level (which was once a major resistance area), but also a Fibonacci retracement area and the rising 200 moving average, both of which tends to draw in orders to play a prevailing trend. And with the prevailing trend to the upside, the odds are pretty good that technical players are seeing these formations as an area to buy rather than sell.
Fundamentally, Disney’s streaming services, mainly Disney+, is a big focus for traders, and while recent subscriber growth numbers disappointed at the last earnings release that doesn’t mean Disney’s streaming businesses aren’t growing. They added 2.1M subscribers in Q4 (44.4M in 2021), and the potential is there for a faster growth rate in 2022 as they are likely to spread into more countries. (Disney+ in only 60 countries vs. NFLX in 190 countries). Add to that Disney’s plan to spend billions on new content in 2022, and the future looks pretty bright for Disney+ at the moment.
Disney’s parks, experiences & products businesses are still recovering from the crippling 2020 pandemic lockdown, and not likely to be helped with the recent spread of the Omicron variant. But with vaccines and upcoming COVID-19 treatment pills coming in 2022 to hopefully slow down severe cases/deaths, the odds are rising that we may be passing peak pandemic disruption. Barring any new unseen negative developments on the pandemic front, Disney’s parks business will likely continue to recover in 2022.
Overall, as long as pandemic conditions improve and broad market sentiment leans positive, DIS should be near the top of any stock/CFD watchlist for longer-term position plays. And with the current price action, a solid technical setup is there to create a long position with good potential return-on-risk if you think DIS can make new all-time highs in 2022 and when setting a trade invalidation point just below Fibs/Moving averages.
What do you think? Is this the bottom for Disney stock? Will their streaming numbers continue to grow and their parks, products businesses improve if the pandemic conditions improve?
Let me know in the comments below, and as always, remember to never risk more than 1% of a trading account on any single trade. Adjust position sizes accordingly. Create your own ideas and don’t simply follow what I do.
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