DIS - Where from Here

Disney has been on my watch-list for a while. During the pandemic because of the Disney+ services and as a re-opening trade with regards to the Theme parks.

The headlines around the Delta variant clearly has muted the price action of DIS quite a bit and the stock has been trending sideways since topping out in March this year.

Fundamental Highlights:

• P/E at 82.5 seems very high but then the theme park closures has impacted earnings and thus driven the PE up
  
• Rev. per Share has been strong thanks to Disney+ service demand during the pandemic
  
• Capital Spending per share remains at the 5y average which in my eyes is solid given the pandemic
  
• Positive FCF shows that the company is able to generate cash even if the parks are closed
  
• Dept / Equity seems solid and not overly leveraged
  
• Disney has not payed dividends since 2019 which is understandable and acceptable
  

Conclusion: The fundamentals seem solid which is confirmed by current analyst ratings and a price target of $210 according to IBKR analyst consensus.

Technicals
Since the highs in March 21 the stock has retracted and bottomed out around $170 with multiple confirmations at that level
Formation of a descending Wedge formation, indicating a positive outbreak potential
Narrow regression band indicates indecisive trading
Failed wedge breakout in the Aug 15/16 trading session, however lower leg has confirmed support
RSI neither overbought nor oversold confirming doll-drum territory
MACD show no clear indication either and has not done so since May
Resistance band around 190-195

Conclusion: DIS seems bound to make an outbreak of the current pattern in a not too distant future. There seems to be strong buying interest in the $170 area. A breakout above the wedge into the resistance level of 190-195 seems likely. Further upside possible but it will require momentum which could be helped by a positive earnings Q2/Q3 earnings report.

My Strategy
Seeking exposure around current levels, might be early but I am confident with the current support levels
A combination of Long Stock and a Risk Reversal
Stock @ Market, SL 170 / TP 209
Risk Reversal Long C Jan 22 210 / Short P Jan 22 150

All feedback, suggestions and input is highly appreciated

*** Disclaimer: I tend to use both Fundamental and Chart Analysis for the evaluation of my investments. I act as an investor, not a trader with a 9 months or more time horizon. The above represents my personal opinion. I write these postings as a trade log for myself. Conduct your own research before taking any positions and do not invest what you can't loose***

Trade active:

Opened trade at 178

Comment:

Channel breakout on Aug-27, let's see if it can hold. Currently market sentiment seems overly bullish on everything. Wanting to see the stock holding the breakout in the coming days.

Comment:

Price action remains below the resistance box consolidating at the $180 level. Compared to the broader market DIS has done ok over the past two weeks which provides confidence.

MACD shows little to no momentum and RSI is at fair levels

Remaining cautiously bullish alongside analyst consensus

Trade closed: stop reached:

Trade closed out during yesterdays session.
A comment from DIS on potentially slowing Disney+ subscriber numbers sent the stock dipping below $170.

(Note: I probably should have used a lower SL limit to avoid getting stopped on an outlier event like this.)