Diary of a Financier

Disney Goes Down

In Capital Markets on Wed 8 Dec 2010 at 11:07
  • DIS looking bleak ST, LT picture still developing.

I’m following Disney (DIS) because I’m waiting for an entry point to buy some shares for my girlfriend. A myriad of qualitative & quantitative reasons make it a great nomination for her first investment, but now is not the time.  My case against DIS fits neatly with one of the pairs trades I’ve been pushing over at Seeking Alpha & StockTwits since November 10: IWF>IWD or Growth outperforming Value.

Short term, DIS’s chart shows bearish divergence on SStochastic, MACD & RSI… a triple witching by my standards.

DIS Daily Chart

With SStoch crossing down through the 80 bound plus a failed double top suggesting mean reversion (50DMA=35.90), enough evidence exists for me to wait for the pullback.

I could stop there, but I superimpose that short-term signal with the longer-term developments, which may prove just as bleak.  With the weekly chart looking reasonably robust, do note the divergence on MACD–a glaring if the MACD crosses its signals in the coming weeks.

DIS Weekly Chart

DIS’s 1.07% dividend is not enough to coax me into a position quite yet… even if I’m buying this for my girlfriend to hold for eternity.

–Romeo

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  1. Disney will make it through this economic bleep eventually!

  2. Since this post, I spent a lot of time researching and analyzing market history. I did a lot of backtesting that helped shape my current philosophy, which now not only incorporates technical indicators & fractal anlaysis, but also classical pattern recognition.
    I waited a few weeks to buy DIS here, as discussed. I was wrong, because the market ran higher. I missed the classic Cup & Handle formation en force on DIS’s chart in December 2010… a good lesson.

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