In the middle of last week, shares of Disney (DIS - Get Report) reached new all-time highs as it extended its streak of higher monthly highs to six straight. This powerful run has lifted up DIS nearly 30% from the October lows. The early April news-related action may prove to be a trend changer, though. DIS is working on a lower monthly high and has broken below key trend line support.
At midday, DIS is beginning to pierce its upward sloping 50-day moving average for the first time since the election. This is a sharp reversal from last week's bullish action. The A rated stock is stabilizing a bit near a key support area at the January high/April low, but the overhead pressure from a divergent MACD (moving average convergence/divergence indicator) may prove too strong. A clear break below the $112.00 area could spark a deep selloff.
In the near term, DIS should keep a close eye on the $112.00 area. Considering the damage of Wednesday morning's clear trend-line break, a hold here would be very impressive. If this level gives way, a much deeper pullback may lie ahead. A drop down to major support near the $106.00 would not be a surprise. This important zone is marked by the 2016 peak and also represents a 1/3 retracement of the huge rally off the October lows.
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