close icon

Disney Ready For a Mid-Term Rally

A year ago, in August 2015, Disney stock was flying above 122 dollars a share. Yesterday’s trading session was closed slightly below 98.00. And while that is still higher than the 86.25 bottom in February 2016, Disney remains one of the beaten-down stocks of the year. Is this going to change? Should you buy the dip? Is Walt Disney Co. stock a worthy long-term investment? These are the questions we are going to answer in this article.

In order to be able to form an opinion, we rely on the Elliott Wave Principle, a forecasting method, discovered by Ralph Nelson Elliott in the 1930s and still trustworthy today. Let’s see what it has to say about Disney’s weekly stock price chart shown below.
disney 6.8.16
The Wave principle postulates that trends move in repetitive patterns. Five-wave patterns, called impulses, indicate the direction of the larger trend, but every impulse is followed by a correction in the opposite direction, before the trend resumes. Keep that in mind and take another look at the chart above. The Great Recession of 2007-2009 brought Disney down to 15.14 dollars a share. This is the bottom our wave count starts from. Where does the decline between 122.08 and 86.25 fit into the wave structure of the post-crisis recovery?
As visible, the advance since 2009 cannot be seen as a complete five-wave impulse, but we believe it is going to become one. Disney’s fifth wave up – V of (III) – is still missing. Should we expect more strength then? We have three reasons to believe so. First, corrections consist of three waves. The weakness to 86.25 is clearly a three-wave sequence, labeled A-B-C. Second, fourth waves usually retrace back to the territory of previous fourth waves. In this case, wave IV goes back to the area of wave (4) of III. And third, wave IV seems to have ended precisely at the 38.2% Fibonacci level, which is where fourth waves often terminate.
If this is the correct count, we should prepare for more strength from now on, since wave V of (III) seems to be in progress. As long as 86.25 holds, targets above 122 dollars are plausible, so we believe staying long is worth the risk. However, once a new top is reached, wave (IV) to the south is likely to bring Disney stock back down to the 90s area. This outlook does not make it a good long term investment. Just a mid-term one, at best.

Stay informed with our newsletter

Latest Elliott Wave analysis on different topics delivered to you weekly.

Privacy policy
You may also like:

DraftKings on the Verge of Another 40% Decline

It’s been almost three and a half months since we examined DraftKings stock in October, 2020. The share price was hovering near $57 after a strong run from $10.60 to over $64 in just several months. The regulatory environment in the U.S. seemed to be warming up and many analysts hurried to issue their BUY…

Read More »

AMN Healthcare Stock to Suffer a 2020-Like Drop

AMN Healthcare Services provides workforce and staffing solutions to healthcare facilities in the U.S. The company is relatively small with a market capitalization of less than $4 billion. However, small companies can make for excellent returns if one happens to identify the winners. And indeed, between late-2011 and early-2020, AMN stock from under $4 to…

Read More »

Zoetis Stock Getting Ahead of Itself, Invites Correction

Based in Parsippany, NJ, Zoetis Inc. is an animal medicine and vaccine developer and manufacturer. The company went public in 2013 and has been enjoying steady growth since. With the stock currently above $160 a share, Zoetis holds a market cap of nearly $80 billion. For a profitable and growing company like Zoetis, a rising…

Read More »

CBOE Stock Looking Good After a Record Year

CBOE Global Markets Inc. is an equities, options and futures exchange operator in the U.S. and Europe. The company traces its roots back to Chicago in 1973, when it practically invented options trading in its present form. CBOE is literally part of the very infrastructure of modern financial markets. So it is not surprising that…

Read More »

Novo Nordisk Bulls Have an Elliott Wave Problem

Novo Nordisk A/S is a Danish pharmaceuticals major with a market cap of over $160 billion. People need their medication even in recessions, so the company’s business wasn’t as affected by the 2020 crisis as most other industries. Novo Nordisk remains a top-notch pharma with consistent profits and revenue and no debt whatsoever. And the…

Read More »

Lockheed ‘s Correction Still Unfolding as Expected

Almost a year and a half ago, in July 2019, we wrote that Lockheed Martin is likely “setting the stage for an unpleasant surprise.” The stock had just reached a new all-time high and was trading at $370 a share. Optimism was in the air and analysts were more bullish than ever. An indeed, fundamentally,…

Read More »

Campari Bulls to Get a Serious Hangover Soon

Campari is an Italian liquor and spirits maker with traditions dating back to 1860. The company’s stock price plunged sharply in March along with the markets in general and then recovered just as quickly to new records by year-end. As shares hover near all-time highs, however, dark clouds appear to be gathering over the spirits…

Read More »

More analyses