Disney Breaks Out on Earnings Beat

Disney DIS reported earnings of 63 cents a share, or $1.14 billion, on revenues of $9.63 billion in its fiscal second-quarter. Profits were better than the consensus estimates which was for EPS of 56 cents a share or of $998 million, on revenues of $9.57 billion.  A year ago, the company earned $9.42 million, or 49 cents a share, on sales of $9.08 billion.

Despite the initial downward movement of the broader markets, Disney bucked the trend moving higher on the open making a new 52-week high.  The stock pushed through resistance near $44.50, which generated a break out on the stock.  Target resistance on DIS is seen near a channel upward sloping trend line that comes in near $50.  Support on the entertainment company is seen near the 50-day moving average near $43. 

Momentum on the stock price is moving higher.  With the 20-day moving average crossing above the 50-day moving average a medium term trend is now in place.  The MACD (moving average convergence divergence index) is in positive territory moving up to .25 which is the highest level seen in 2012.  Additionally, the MACD created a buy signal in late April where the spread (the 12-day moving average minus the 26-day moving average crossed above the 9-day moving average of the spread.

The RSI (relative strength index) which measure over-bought and over-sold levels is now printing near 66, which is the upper end of the neutral range.  The RSI pushed above 70 four times in the past 6-months and in each situation, the market pulled back and average of 2%.  Volume on the stock increased above the 50-day moving average of volume, which confirms the upside breakout.