PreMarket Prep Stock Of The Day: Disney

Benzinga's PreMarket Prep airs every morning from 8-9 a.m. ET. During that fast-paced, highly informative hour, traders and investors tune in to get the major news of the day, the catalysts behind those moves and the corresponding price action for the upcoming session.

On any given day, the show will cover at least 20 stocks determined by co-hosts Joel Elconin and Dennis Dick along with producer Spencer Israel.

The price action in an issue in the after-hours and premarket sessions following an earnings report can vary to when the real liquidity comes in at 9:30 a.m. Let's take a look at one such case with Friday's PreMarket Prep Stock of the Day, Disney Co. DIS. 

Disney's Pre-Earnings Rally: It's common for major companies that are in an uptrend to move higher ahead of earnings reports, with the expectation being the company will continue to post good numbers and the uptrend will continue.

On Jan. 27, only 11 sessions ago, Disney made an intraday low at $160.52 and rebounded to end the session at $163.03.  The ensuing rally took the issue to a new all-time high ($191.25) and all-time closing  high ($190.91).

It was a tidy 19% return over a short period of time, which put the issue in the green by 5.6% after a rough start.

Disney's Q4 Beat: After the close on Thursday, Disney reported quarterly earnings of 32 cents per share, which beat the analyst consensus estimate of a 41-cent loss by 178.05%. 

This is a 79.08% decrease over earnings of $1.53 per share from the same period last year. The company reported quarterly sales of $16.25 billion, which beat the analyst consensus estimate of $15.93 billion by 2%.

This is a 22.1% percent decrease over sales of $20.86 billion in the same period last year.

Disney's Fantasyland After-Hours, Premarket Price Action: Within 45 minutes after the report, Disney surged to $198.77 and retreated to end the after-hours session at $193.89. 

At the onset of premarket trading, Disney peaked just above that area at $185, and patient sellers took over.  

Disney's Friday Price Action: Disney had a major rally heading into the report, and with the extended price appreciation in Thursday's after-hours session, it was primed for some profit-taking off the opening bell Friday. 

Following a higher open, it rallied another 85 cents to $193.85 and sharply reversed course. The ensuing decline breached Thursday’s low ($188.07), but found support ahead of Wednesday’s low ($185.81) at $186.56 and rebounded back into the $188 handle.

Disney shares were down 1.24% at $188.55 at last check Friday. 

Disney Moving Forward: Disney investors may want to focus on Thursday’s all-time closing high price ($190.91) to determine if the rally will continue. 

Keep in mind that another catalyst may be needed to instigate another leg higher.