Is Now The Time to Finally Buy Disney Stock at $100?

Posted by jbrumley on May 13, 2022 1:21 AM

-- Disney stock dipped down to $100 this morning, giving bulls a chance to get long. Will the bounce last? --

By Bret Kenwell,

Disney (DIS) is under pressure on Thursday, down slightly on the day, but earlier in the session was changing hands just below $100 and down 5.5% at the session low.

The move comes after the company reported disappointing quarterly results after the close on Wednesday.

It's been a tough earnings season given that we're in a tough, bear-market environment for many stocks - Disney included.

Shares are down 50% from the all-time high and investors don't seem to be in a rush to scoop up the stock. The headline numbers of the recent quarter aren't helping matters, as Disney missed on earnings and revenue expectations.

It makes one wonder if Disney has lost its magic.

However, there are positives. For instance, it added 7.2 million subscribers to its streaming platforms. That brings its total to 137.7 million customers and came in well ahead of estimates looking for 2 million additions.

It's also a notable outperformance given the disappointing results Netflix (NFLX) recently reported.

Second, parks and Experiences revenue came in firmly ahead of estimates, at $6.65 billion vs. $6.3 billion. So it's clear that consumers are traveling again and are willing to spend - something other executives have confirmed as well.

Now cut in half from the high, is it worth taking a closer look at Disney stock?

Trading Disney Stock

Weekly chart of Disney stock

Chart courtesy

Shares dipped on the open and undercut the key $100 level. That is an important psychological level and even more so because the stock was down 50% from the high.

However, we are bouncing now as buyers step into Disney stock - perhaps based on some of that good news outlined above.

In any regard, we're now looking for a potential bounce. Keep in mind that if shares finish lower this week, it will make it the eighth straight weekly decline and the 11th decline in the last 12 weeks.

Should we get a bounce going, I immediately need to see $105.60 reclaimed, which is the 78.6% retracement of the current range. Back above this level puts this week's high in play at $110.74.

If we can clear this level - which is a three-day high as well - then we could be looking at a larger bounce. Specifically, I'd have my attention up at the $120 area and the declining 10-week moving average.

On the downside, today's low at $99.47 will be key. If we break that level and can't reclaim it, then Disney stock could very well continue lower. If we get some sort of monstrous flush to the downside, it's hard to ignore the $80 area, which is the March 2020 Covid lows and where the 200-week moving average comes into play.