Shares of Disney crashed in August, starting with its weak results and forward guidance and commentary around a secular shift in viewer consumption, which crescendoed into the August 24th flash crash lows of a peak to trough decline from August 4th of 26%.
The stock has come roaring back though, now above its August 5th gap level, with no overhead resistance back to the prior highs:
The one year chart above shows a fairly symmetrical technical near term set up, with resistance up about $5, and support down about 5%, or about 4.5% in either direction. Which happens to be very close to the implied move in the options market between now and Friday Nov 6th close. That implied move captures next Thursday’s fiscal Q4 earnings report. With the stock at $115, the Nov 6th weekly $115 straddle (the call premium + the put premium) is offered at about $4.60, or 4% of the stock price. If you bought that, and thus the implied move, you would need a move of above $119, or below $111 between now and next Friday’s close to make money.
Backing the ol’ chart out to a 5 year, it becomes clear that aside from the Aug 24th flash crash low, the stock has fairly consistently held the uptrend that has been in place since its late 2011 lows, with $100 on the downside as massive 1 year support:
Looking past next weeks results, investors will obviously focus on the December 18th release of the highly anticipated Star Wars reboot, and if next week’s results are better than expected and guidance a little more sanguine than last quarter, the stock could easily make a new high. But the second consecutive guide down would likely have the stock once again testing the uptrend.
We will be sure to take a closer look just prior to results.