Trading Strategies For Disney Stock Before And After Q2 Earnings

Walt Disney Company DIS stock was falling Wednesday heading into its second-quarter financial report after the market closes.

When the company printed its first-quarter results on Feb. 8, the stock gapped up 5.6% the following day but ran into a group of sellers who caused Disney to close that session down 1.27%. After the sell-off, the stock entered a downtrend, which brought Disney to a March 13 low of $90.46.

For that quarter, Disney reported adjusted earnings of 99 cents per share on revenue of $23.51 billion. The company beat the EPS estimate of 78 cents on revenues of $23.37 billion.

For the second quarter, analysts estimate Disney will print earnings per share of 83 cents on revenues of $19.43 billion. Traders and investors will be watching closely to see if the company has increased its Disney+ subscribers in the wake of its rivals reporting subscription growth. Read more here...

On Monday, Morgan Stanley analyst Benjamin Swinburne maintained an Overweight rating on Disney and raised the price target from $115 to $120. The new price target suggests about 20% upside for Disney.

From a technical analysis perspective, Disney’s stock looks set to trade higher over the coming days because the stock is trading in an uptrend on the daily chart. It should be noted that holding stocks or options over an earnings print is akin to gambling because stocks can react bullishly to an earnings miss and bearishly to an earnings beat.

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The Disney Chart: Disney reversed into an uptrend on April 26, which was confirmed when the stock printed a higher high at the $103.91 mark on Monday. The higher low negating the downtrend was formed on May 4 at $96.61, when the stock almost formed a bullish double bottom pattern when compared to similar price action near that level on April 26.

• On Wednesday, when Disney fell to the low-of-day, buyers came in and bought the dip, causing Disney to form a possible hammer candlestick. If Disney receives a positive reaction to its earnings print and rises on Thursday, Wednesday’s low-of-day will become the next higher low within the uptrend.
• If Disney suffers a bearish reaction to the news, bullish traders will want to see the stock form a bullish reversal candlestick, such as a doji or hammer candlestick, near the $97 level. Bearish traders will want to see Disney fall under that area, which will negate the uptrend and set the stock into a possible downtrend.
• Disney has resistance above at $100.90 and $108.50 and support below at $92.71 and $85.76.

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