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The Walt Disney Company - (DIS) - May 16, 2024

Trading action in the shares of Walt Disney (DIS) this year provides a reminder to investors that not all recovery trends work out and the importance of ongoing risk management.

Back in February, Disney climbed up out of the Red Unfavored Zone of the SIA S&P 100 Index Report, moving back into the yellow zone for the first time in three years. The shares were unable, however, to continue their trend up into the green zone. In recent weeks, their relative strength has weakened again and DIS has tumbled back down into the Red Unfavored Zone.

Disney shares have dropped 17 spots in the last week and 34 positions in the last month to 67th place. Over the last month, the shares have dropped 9.0% compared with a 5.1% gain for the S&P 100 Index.

Candlestick Chart Extends a Breakdown.

Back in March, the technical picture for Walt Disney (DIS) had been looking pretty good. The shares had been trending upward for weeks, had rallied on a volume spike and had broken out over $120.00.

That was about as good as it got however, because in March DIS ran into resistance near $125.00, dropped back under $120.00 and has been steadily falling since, pulling back under its 10-week moving average, and taking out $110.00, which has reversed polarity to become initial resistance on a bearish spike in volume. Disney is currently approaching potential support near the $100.00 round number. Should that fail next potential support may appear near $90.00 or the fall 2023 lows in the $78.00 to $80.00 area.

A long-term downtrend in Walt Disney (DIS) shares appeared to have bottomed out late last year, but recent trading suggests it may be resuming. A rally to start the year broke out of a downtrend in February and extended for several weeks afterward.

In April, however, the shares ran into resistance near $125.00 once again and since then, DIS has been under renewed distribution. Earlier this month, the shares completed a bearish Double Bottom with a breakdown below $109.80 and have continued to decline from there extending the current O column into a bearish Low Pole.

DIS is currently approaching initial support near the $100.00 round number, followed by previous column highs or lows near $95.50 and $90.90 on trend. Initial resistance on a bounce appears near $107.65 based on a 3-box reversal and a previous support level.

With its bearish SMAX score (which is a near-term 1 to 90-day indicator comparing an asset against different equal-weight asset classes) of 5 out of 10, DIS is exhibiting short-term weakness against the asset classes.

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