Disney Rejected 38.2% Fibo but Upside Intact
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DIS rejected the pivotal 38.2% Fibonacci (of the slump from the 2021 record highs to the 2023 multi-year low. This creates risk for renewed pressure towards the Daily Ichimoku Cloud, but daily closed below the EMA200 (at around 98.80) would be needed for the upside bias to stop and that has high degree of difficulty at this stage.
However immediate bias is on the upside following the impressive 35% relief rally of Q1. The Death Cross formation (EMA50>EMA200) also add to the upside potential. The stock has the ability to take another crack at the 38.2% Fibonacci that could open the door to further gain towards the 50%.
Context
The entertainment giant had a rough couple of years as its linear networks took a hit from soft advertising and cord cutting, box office success was elusive and the streaming business lost subscribers, handing the first spot back to Netflix. This led to a poor stock performance with nine years lows last October and led to proxy fight by activist investors.
Disney won that fight last week as shareholders reelected the full board. With this challenge behind it, it can focus on the turnaround efforts, which are already working. The last quarterly results impressed with the streaming segment adding subscribers and its financials improving, looking to turn profitable before the end of the year. It is also going all-in on digital sports, an increasingly important market.
On the other hand, Disney still has to navigate a challenging environment and generational transformations in the media industry, while having to get Mr iger's succession right, which it botched the last time.