Shares of Disney (DIS) have been fighting to retake the $100 level for the last two months and have failed. After a foray of attempts two weeks ago, they retreated last week, gapping lower and moving below their 50-day moving average.
This failure is part of a bearish scenario apparent on multiple timeframes.
The weekly chart shows the steady multi-year rising channel rally off the 2011 low, followed by a channel breakout in early 2015 and then a sharp drop back down to channel support later that year. Volatility continued, and the stock managed a sharp bounce and rallied back up to the channel breakout high, but that energy was expended quickly, and it dropped again, this time taking out channel support.
Efforts to re-enter the channel range in April and May were unsuccessful, and momentum faded taking the share price back below the $100 level. The relative strength index has moved below its center line, and accumulation/distribution crossed below its 21-period signal average. A double top may have been formed by the 2015 highs, and the price action below channel support this year resembles a head and shoulders top. The price action and the technical indications on the weekly chart suggest a negative shift in the trend.
The attempts to retake the $100 level can been seen on the daily chart, and just above that barrier are two more levels of resistance supplied by the 200-day moving average and a downside gap created in May. As indicated on the weekly chart, the stock has been under pressure for more than two months. At the top of the daily chart is a performance graph of Disney relative to the S&P 500, and it has underperformed the index by 26% over the last eight months. Moving average convergence/divergence is making a bearish crossover just above its center line, and Chaikn money flow is below its signal average and in negative territory.
The stock is a good risk/reward short candidate at its current level using a protective trailing buy-to-cover stop. Short positions are highly speculative by nature, and the prime trading directive is preservation of capital.