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Buy or Sell Disney Stock? Here's What the Charts Say Now

Disney stock is clinging to support now after looking so good just a few days ago. Here's how to trade it now.

Disney  (DIS) - Get Walt Disney Company Report shares are catching a bit on Wednesday, up about 1% after taking a hit on Tuesday.

The stock fell 4.2% on Tuesday, following comments from management that subscription growth for Disney+ would slow in the current quarter. That’s due to production delays as a result of COVID-19.

Analysts were quick to defend the stock, which helped to provide today’s bounce. At one point, shares were up more than 2% on the day.

Still, it’s been a rough couple of days for Disney despite some solid news, as shares also fell 2.6% on Monday. In all, the stock is down 5.75% for the week.

That’s even as Disney plans to raise prices on its Hulu streaming platform and as its Shang-Chi film exceeded expectations at the box office earlier this month. 

In fact, because the latter performed so well — which also gave some hope to AMC Entertainment  (AMC) - Get AMC Entertainment Holdings, Inc. Class A Report bulls — Disney plans to release the rest of this year’s films exclusively in theaters.

Despite this good news, the stock isn’t behaving well. Let’s look at the charts.

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Trading Disney Stock

Weekly chart of Disney stock.

Weekly chart of Disney stock.

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As of just a few days ago, Disney stock was actually trading pretty well. The stock was attempting a monthly-up rotation over the August high and was trending above its short-term weekly moving averages.

Everything was working in the bulls’ favor. But this week has been a different story, with the sellers burying this name. The action in the broader market has certainly not helped the situation.

However, Disney is now trading down into an area that has been support almost all year long. This $170 support zone temporarily failed just twice, in February and May.

Further, the stock is also trading down into its 10-month and 50-week moving averages. Disney stock also reclaimed last month’s low at $171.10.

It’s been choppy, but more aggressive longs will likely want to be long Disney on the dip to this area.

So long as this week’s low holds, investors can try to ride Disney stock for a rebound up to the $178 to $180 area. There it will run into several key moving averages. 

However, above $180 and there is a small gap-fill left up at $182.75, before the stock can attempt another monthly-up rotation at $187.58 (which is the August and September high). 

On the flip side, if the overall market comes under selling pressure and Disney loses the Q2 low near $167, who’s to say it can’t go down to the $150 to $155 area and test the 21-month moving average?

For now though, watch this week’s low at $169.03. Below this level is not constructive to the bull case.