DISNEY TECHNICAL ANALYSIS 20/12/2018

• Stop Loss sale price was triggered at $109.

• The question has to be asked, ‘Will I be able to buy this back at a lower price?’

Money Flow – is at 39. 80 is ‘Overbought’, 20 is ‘Oversold’. There is room to the downside in the short term.

Momentum – is in a downtrend. Need to see this curl upwards.

On Balance Volume – shares have been in an accumulation uptrend throughout the broader market pullback.

Technical Support – was near $110 and that level has been broken.

STOP LOSS – at $109 was triggered.

Next level Technical Support $102.

Why did the stock price pullback?

There always has to be a catalyst.

• December 19, 2018 the US Federal Reserve announced a 0.25% interest rate hike with a forecast of two further rate increases in 2018 (reduced from 3).

• The Fed expressed that the US economy was strong and there was a requirement to slow the economy which affects corresponding corporate profit growth.

• A slowing domestic economy affects employment, disposable income, consumer confidence and increased personal debt costs.

What does that mean at MONEYWISEHQ

The STOP LOSS price should have been triggered and now the strategy becomes a question of when to start rebuilding the position or having a level of confidence that the stock price will re-enter a new pattern.

The Investment Thesis for Disney is founded on a strong macroeconomic environment. 

The economic data and the December 19 US Federal report reflect a strong domestic economy. Disney is largely domestic focused and not subject to tariffs or the US/China trade war. This is largely why it has been insulated from the broader market selloff and has been a ‘safe haven’.

The stock has been set up for a decline. The share accumulation reflects a ‘storage’ place for investors money, however inevitably investors start protecting their capital and those shares will be sold or used to take advantage of opportunities with higher reward vs risk profiles.

At this point the question has to be asked, ‘will I be able to buy it back at a lower, or equivalent price at some point?’ The next target support level is $102 representing 7% risk.

The stock has a strong Investment Thesis but remember…

Rule #1 : a successful investor has to be aggressive to make money, but if you are not defensive you won’t keep your money.