Walt Disney stock reached its all-time high of $122.08 on August 4th, 2015, and has been a one of the most boring stocks in the market ever since. The share price has been lingering between $122 and $86 for almost three years now. The last time we wrote about it, Disney stock was trading slightly below the $96 mark. That was in August, 2016. Yesterday, the market closed at $104.03, but that is definitely not what we meant by “Mid-Term Rally”.
An 8% return in 18 months is not our idea of a good investment. The choice to make is whether to hold or just give up and sell. But first let’s see how Disney stock has been developing while we were waiting for it to rise.
The daily chart above visualizes what “wasting my time” means in the market. Walt Disney stock went practically nowhere during the recent couple of years. It moved down to $86.25, then up to $116.10, then down to $96.20 and back up to $113.19. In mid-February 2018, the stock was touching $100 again. Obviously, if you check the word “progress” in the dictionary, you will not find a picture of Disney’s logo.
On the other hand, DIS still achieved something. It formed a recognizable pattern, called a triangle, which comes to tell us that there is still hope for Disney stock bulls. A triangle consists of five sub-waves moving sideways. In the contracting variety, every wave is smaller than the previous one. Also, each of the five waves has a three-wave structure.
The daily chart of Disney stock above shows the five waves, labeled (a)-(b)-(c)-(d)-(e). Waves (a) and (b) are simple a-b-c zig-zags, while waves (c), (d) and (e) have taken the shape of a w-x-y double zig-zag. Triangles, just like any other correction, only interrupt the larger trend. Since Disney was in an uptrend before the triangle began, we can now expect it to resume once the pattern is finally over.
If this count is correct, wave (e) is not supposed to breach the lowest point of wave (c). This makes $96.20 an appropriate invalidation level for the bullish outlook. As long as Disney stock trades above this key figure, $130 is a plausible target. It looks like Mickey Mouse is finally ready to break out from his prison.