Key Takeaways
Disney ( DIS ) shares were moving higher in early trading Friday, adding to the big gains recorded yesterday after the entertainment giant topped Wall Street’s quarterly estimates and provided an upbeat long-term outlook .
The company, which also plans to buy back $3 billion worth of its stock over the next year, projects high-single-digit adjusted earnings per share (EPS) growth in fiscal 2025 and double-digit growth in fiscal 2026 and 2027, in part, driven by strength in the entertainment conglomerate’s streaming business, which reported a $321 operating profit during the September quarter.
Disney shares, which gained 6% yesterday, were up another 3% in early trading Friday, to around $112. The stock has gained 21% so far in 2024, trailing the S&P 500’s 25% return over the same period.
Below, we take a closer look at Disney’s chart and use technical analysis to point out key post-earnings price levels to watch out for.
Pennant Breakout Accelerates
Disney shares broke out above a pennant pattern last week, with upside momentum accelerating after the entertainment giant’s better-than-expected quarterly results.
Importantly, above-average volume backed the move higher, indicating buying participation from larger market players, such has institutional investors and asset managers.
Moreover, the relative strength index (RSI) confirms bullish price momentum with a reading above 60, though the indicator sits below overbought levels, which gives the stock room to test higher prices.
Let’s identify three key overhead levels on Disney’s chart that investors may be watching and also point out a major support area that may come into play if the stock undergoes a reversal.
Key Overhead Levels to Watch
Firstly, it’s worth monitoring how the stock responds to the $123 level. This location, which currently sits just above the closely watched 200-day moving average , could find resistance from a trendline that links a range comparable price action on the chart between July 2020 and March this year.
A close above this level could see the shares climb to around $137, an area on the chart where investors may place sell orders near the August 2020 swing high and January 2022 swing low .
Further buying may propel the shares to the $153 region, an area around 40% above Thursday’s close likely to attract selling pressure near the December 2019 swing high and February 2022 countertrend peak.
Major Support Area to Monitor
If Disney shares undergo a reversal, investors should keep track of the $85 level. This location on the chart would likely encounter buying interest near a multi-year horizontal line that connects the pandemic-era low with prominent troughs in December 2022 and August this year.
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As of the date this article was written, the author does not own any of the above securities.