And why shouldn't it be jumping? The company delivered a top- and bottom-line earnings beat, while it saw strength across the board from its various businesses. Its $71 billion acquisition of Fox bolstered its content library and its Disney+ streaming service is launching next week.
Throw in the two lay-up blockbusters Disney has in the queue in the next two months - "Frozen 2" in November and "Star Wars" in December - and it's hard to get too bearish on this name.
Also acting as a catalyst to the bull case is the fact that Disney stock has been consolidating for months now after topping out in late July.
Friday's jump obviously has investors excited that more upside could exist. However, it's not rallying with the type of definitive momentum some were hoping for. It leaves the lingering question of whether Disney has what it takes to continue higher, and makes it the perfect pick for Real Money'sStock of the Day.
Let's look at the charts.
Trading Disney Stock
On Thursday before the report, we did a Disney stock earnings preview. In that preview, we noted how shares were hugging the 50-day moving average near $132.50, while the 200-day moving average was below and the 100-day moving average was above.
Adding extra significance to those levels is the fact that each moving average has a key Fibonacci retracement nearby. The 100-day moving average trades near the 78.6% retracement at $137 and the 200-day moving average trades near the 61.8% retracement at $129.04.
In my view, these markers became must-hold levels. That is, on a pullback, the $129 level had to hold as support or Disney stock risked a larger move to the downside. If shares reclaimed $137, this mark became a must-hold support level too, otherwise risking a decline back down to the 50-day moving average and possibly the 200-day.
Now that Disney has made its move - a gap-up open over $140 - investors now know the setup.
DIS stock has to hold over the 100-day moving average now, or else risking more downside. As long as this level holds, the setup is constructive. It turns bullish if and when Disney shares take out Friday's high of $140.25, putting $142+ on the table.
This article is commentary by an independent contributor. At the time of publication, the author had no positions in the stocks mentioned.