First up this week is entertainment giant Disney (DIS - Get Report), a firm behind characters like Mickey Mouse and divisions that include ESPN and Pixar. Disney has been showcasing tremendous relative strength in the past six months, rallying more than 21% year-to-date; the S&P has only gained 4.6% over that same period. Now, it looks like Disney is primed for bigger gains.
Disney is currently forming an ascending triangle pattern, a setup that's identified by horizontal resistance above shares at $46 and uptrending support below them. Essentially, as DIS bounces in between those two technical levels, it's getting squeezed closer and closer to a breakout above that $46 resistance level. When that happens, we've got a buy signal for this stock.Momentum, measured by 14-day relative strength index, adds some extra confirmation to this setup -- it's been locked in an uptrend itself since DIS' April swing low. That's a good sign considering that momentum is a leading indicator of price, still, I'd recommend waiting for $46 to get taken out before becoming a buyer.