Disney

08/18/16 03:23:01 PM

by Koos van der Merwe

Disney has 13 movies coming out in 2016.

Security: DIS
Position: Accumulate

Disney had a big year in 2015 with two Pixar movies, and 2016 looks as though it will be even bigger with the studio releasing its official list of movies. After the success of Cinderella, the company released a list of its planned movie release for the coming four years. On June 29th, 2016, the company declared a semi-annual cash dividend of $0.71 per share. With the share price presently at $96.84 this is a yield of 1.47%. On August 9th the company reported quarterly earnings of $2.6 billion for its third fiscal quarter ending July 2, 2016, an increase of $114 million over the prior year quarter. "We are thrilled with our continued performance," Robert A Iger, the Chairman and Chief Executive Officer said.

Figure 1. Monthly chart with Elliott wave count.

Graphic provided by: AdvancedGET.

The chart in Figure 1 is a monthly chart with an Elliott wave count suggesting that the share price is in a WAVE 4 correction. Targets suggested are $79.87 or $67.59. With the PTI (Probability Index) at only 33, the likelihood of the share price falling to $67.59 is the most likely. The MACD indicator is also suggesting a fall to the lower target. However, volume has been falling as the share price fell, suggesting strength, possibly the result of fewer sellers as the financial results and future growth prospects were released.

Figure 2. Weekly chart with Elliott wave count.

Graphic provided by: AdvancedGET.

Figure 2 shows a weekly chart confirming the correction suggested by the monthly chart in Figure 1. The chart does suggest a wave 5 failure, a procedure that is becoming more and more common as computers become more dominant in market trading. The RSI indicator is suggesting that a buy signal has been given, and the Elliott wave count is suggesting that the share price could be in a wave iii upwards. However, this will only be confirmed when the share price breaks above the downward sloping resistance line. Do note that volume did rise as the share price rose, suggesting strength.

Figure 3. Daily chart with JM Internal Band.

Graphic provided by: AdvancedGET.

Finally, the chart in Figure 3 is a daily chart with a JM Internal band not suggesting a buy. The JM Internal band is a 15 period simple moving average offset by 2% positive and 2% negative. A move above the upper band suggests a buy and below the lower band a sell. The RSI indicator has given a BUY, but the Stochastic RSI is suggesting weakness. Waiting for the Stochastic RSI to reach oversold levels before buying could be the way to go for traders, but investors could wait for a move above the upper JM Internal band before buying.

Disney is a share that I would place on my watch list. With the list of future movies for the coming years, and the success of the movies so far released in 2016, this is a share one should buy on the correction and hold for the very long term.

Koos van der Merwe

Has been a technical analyst since 1969, and has worked as a futures and options trader with First Financial Futures in Johannesburg, South Africa.

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ELLIOTT WAVE

Disney

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