Buy Disney stock? - The analysis

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The stock market psychology prevents a bear market

The mood on the US stock exchanges can be described as "reserved". The latest figures show that the bulls (29.7%) are still slightly ahead of the bears (26.9%) and the vast majority (43.3%) have switched to the neutral camp.

By the way: A large neutral warehouse usually results in a trend continuation. Neutrality arises from uncertainty about future developments. It is a decision uncertainty. In an upward trend, the neutral market participants do not expect a price drop, otherwise they would have switched to the bear camp immediately, but with incalculable price movements. You assume that the trend is exhausted, and yet you do not want to be caught on the wrong foot with a theoretical short position.

If there is no correction, or the stock market can be high Keeping level, the neutral camp begins to ponder. They then often correct their neutrality and go back to long positions. After all, the fear of missing a stronger upward movement is a strong driver.

With this mood-related starting situation, a surprising upward wave is becoming more and more likely. So summer does not have to be a slump in stocks.

The mood in the USA

The AAII (American Association of Individual Investors) conducts a monthly sentiment survey, which brought the following results. (06/29/2017)

Bullish 29.7% (-2.9% on the previous month)

Neutral 43.4 (+ 5.0% on the previous month)

Bearish 26.9% (-2.1% on the previous month)

The AAII conducts this survey every month. To do this, market participants have to make a forecast for the next six months.

The result suggests that the stock marketers do not intend to sell their shares to sell. The US economy is doing too well and there is no end in sight.

Image: S&P500 weekly chart with RSI indicator

The candlesticks are changing

The upward trend of the S & P500 is intact. A danger only arises if the small blue-drawn trend fork (pitchfork) is penetrated from top to bottom.

Every trend works like a no-brainer. It practically feeds itself until it surprisingly breaks down. Note the size of the last candlesticks. The size of the candlesticks has decreased since April. It indicates that market participants are becoming more cautious. The market is sneaking up.

This appearance is 100% in line with the AAII sentiment survey. The bull camp is getting smaller, and at the same time the bears are unable to create dangerous sales pressure. The logical consequence is an increase in the number of neutral market participants.

Slight bearish divergence recognizable

The upper chart contains a special compilation of the indicator. Here, the RSI and the OBV are shown together. Basically, the OBV should confirm the movements of the RSI. While the RSI (red) lingers in high regions, the OBV (black) could not quite follow. It indicates that the market lacks trading volume. Technically, this creates a small bearish divergence. These have been around since the end of May - relatively long. And if a divergence continues for a long time and remains without effect, then it loses its effect. Therefore, the divergence is negligible.

Trend analysis of the largest Dow Jones companies

Short-term = trend analysis of the past 40 days Medium-term = trend analysis of the past 40 weeks Long-term = trend analysis of the past 40 months

Table: Dow Jones Mighty

The top table shows the six largest companies in Dow Jones Industrial by market capitalization. These companies are important to assess the upside potential of the entire US stock market. In the table above, the trends from three different time frames are considered.

The majority of the largest Dow-Jones is in a long mode. In a direct comparison there are 9 long and 3 short evaluations of the trend.

This short analysis also confirms that a short-term weakness should bring a new chance for a long entry.

Buy Disney stock? - The analysis

Buy Walt Disney stock?

As an entertainment company, Disney is the undisputed number 1 in the world. No other company offers this wide range of high quality entertainment. The company certainly laid the root of its success with its cartoon films. This is still an important business area today. Over the years, Disney has expanded considerably. The animation section is supplemented by the television network ABC Network. ABC is size three, the number three US broadcaster. The portfolio is rounded off with the Disney Parks and Resorts.

There are additional investments in the media landscape with several holdings through the holding company WDC. Here Disney is a strategic investor. The sports channel ESPN or the German broadcaster Super RTL are among the investments.

Disney earns the most money with its film offer for animation. While the large film studios with conventional films often show greater fluctuations in revenue and success, Disney can offer consistency. That is certainly due to the focus on the young audience. There will always be a need for children's cartoon films. The film offering is rounded off with Marvel and productions by George Lucas.

Disney increased its sales by three percent in the first quarter of the year. Savings even increased net profit by 11%. The bottom line is that no other media company earns as much as Disney.

Walt Disney business figures

Walt Disney are estimates Source:

The films and theme parks at Disney are the cash cows. There are currently problems with ESPN. The pay broadcaster loses subscribers to the sports program. Disney is trying to counteract this and win new viewers with an online strategy via Facebook, Amazon and YouTube. The biggest problem is the escalating costs for sports rights (NFL and NBA). Higher costs tend to result in higher fees, but they no longer want to be paid by subscribers. It appears that the upper price limit has been reached.

In the first quarter, sales of ESPN increased. However, this was at the expense of profits. ESPN remains the problem child. But if Disney manages to get a grip on the problems at ESPN, it should give the share price a real boost.

Image: Weekly chart of the Walt Disney share with the RSI -Indicator

Willingness for a technical outbreak

The double top education in 2015 had an impact in the following year. The prices fell and consolidated. The chart shows that the willingness to sell the stock is no longer acute. The last low in October 2016 should no longer be reached in 2017.

There is currently a small upward trend. It has its own characteristics and is dynamic. The upward trend is also underpinned by the takeovers and changes in the Disney group. The fundamental starting point for 2017 cannot be compared with previous years. The resistance at $ 115 has only a psychological effect. If the price goes above this, the upward trend should accelerate again.

The price wave from October 2016 to April 2017 is striking. It forms the basis for the future course. Technically, this surge has been corrected by around 50% since April. It is a "healthy" consolidation and should attract new stock marketers. It can therefore be assumed that traders and investors will view the current situation as an opportunity to get started. There was a buy signal at $ 105.

The overall situation shows a good risk-reward ratio. The profit potential is open upwards. If there is positive news about ESPN, the stock should go up very quickly.

Only the overall market for stocks could put a spanner in the works. If the Dow Jones Ind. Crashed, the Disney stock would certainly also be affected. A technically tight stop can be set so that this cannot become a problem. I recommend closing the position below $ 102.50.

Disney stock: WKN: 855686 on German stock exchanges or US symbol DIS in the US

Target price: 124.00 US $

Stopover: US $ 114.80

Stop Loss: US $ 102.50

Trading Transaction:

If you want to benefit from the short-term stock recommendation, you can buy the stock directly or work with derivatives. Note that derivatives include leverage and therefore increase the profit and loss potential. In extreme cases, a total loss is even possible.

Trading information:

Stop loss: The stop loss is initially set as an initial stop and has the function of a maximum Loss limitation.

Price target: The price target is the exit point for the forecast market movement.

Interim target: When the intermediate target is reached, the position is in profit. At this point we take a partial profit and we sell 50% of our position. At the same time, the stop loss is adjusted to the personal entry price. This enables us to close our position without loss, even if the market later turns against us.

Buy Disney stock? - The analysis

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