Walt Disney at Monthly Support

Dow component Walt Disney Co. (DIS) has rallied over 9% on low volume since February, lifting into 50-day moving average resistance. The entertainment giant has struggled with this barrier since March 2021, highlighting a bear market impulse that’s now undercut the price level traded when the company rolled out Disney+ in November 2019. The stock is down more than 8% so far in 2022 and is still showing no signs of attracting new shareholders.

Where’s the Blockbuster?

COVID-19 lockdowns and restrictions shut down production studios, theme parks, cruise ships, and sporting events. Things are back to normal but Disney hasn’t produced a single blockbuster since Avengers: Endgame in 2019. Accusations of political woke-ness and lore destruction have plagued marketing efforts, encouraging a legion of former fans to pass on new offerings. The $1.9 billion earned by 20 Century Fox’s Spiderman: Homecoming has been a slap in the face in this regard, given the sub-par performance of Disney’s newest Marvel movies.

Disney+ added 11.8 million streaming subscriptions in the fourth quarter, higher than expectations, but the service isn’t expected to make money for another two years. In addition, accounting tricks padded the quarterly metrics, with bean counters adding two million Hulu Live subscribers to the domestic total.  Disney has also announced a new ad-supported subscription tier, raising fears the slimmed-down service will bastardize paying customers.

Wall Street and Technical Outlook

Wall Street consensus stands at an ‘Overweight’ rating based upon 20 ‘Buy’, 2 ‘Overweight’, and 8 ‘Hold’ recommendations. Price targets currently range from a low of $132 to a Street-high $229 while the stock is set to open Thursday’s session about $50 below the median $191 target. This dismal placement highlights a major disconnect with Main Street investors, who have been sitting on their hands for more than a year now.

Walt Disney mounted the 2019 peak at 153.41 in November 2020, entering a strong uptrend that hit an all-time high at 203.02 in March 2021. The subsequent decline completed a double top breakdown in November, also violating the 50-day and 200-day moving averages. January and February 2022 rally attempts failed to remount those resistance levels, consistent with a bear market impulse that’s now settled at the 50-month moving average near 138. Stochastics has now entered a monthly buy cycle but, so far at least, there’s been no sign of accumulation.

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Disclosure: the author held no positions in aforementioned securities at the time of publication.