Disney Stock Holds Strong Amid Market Weakness: What's Next?

Walt Disney Co DIS was trading slightly higher Wednesday despite overall market weakness after breaking up from a triangle pattern on Tuesday. The stock then ran into resistance at $187.58.

The Disney Chart: The resistance has held since April 7 when Disney’s stock closed below the level. The most recent attempt to break above the resistance, on Aug. 13, also failed and Disney wicked from the area. The attempt, paired with Wednesday’s action has caused Disney to create a bearish double top pattern.

See Also: Disney Promises To Become 'Major Player' In Asia-Pacific Entertainment Markets

Disney’s stock looks to be printing an inverted hammer candlestick, which indicates lower prices may come on Thursday. The stock may find support at the upper descending trendline of the triangle, however, and if the stock holds above it the backtest of the line would be considered bullish by technical traders.

Disney’s stock is trading above the eight-day and 21-day exponential moving averages (EMAs) with the eight-day EMA trending above the 21-day, both of which are bullish indicators. The stock is also trading above the 200-day simple moving average, which indicates overall sentiment is bullish.

Disney has support below at $181 and $176 and resistance above at $187 and $191.

A number of options traders believe Disney’s stock will trade higher over the coming days and into next week. Together the traders purchased $753,832 worth of bullish call contracts with one trader spending $403,690 on a single order of calls with a strike price of Sept. 17 and a $185 expiry.

See Also: How to Buy Disney Stock & Where to Buy It

Why It’s Important: When a sweep order occurs, it indicates the trader wanted to get into a position quickly and is anticipating an imminent large move in stock price. A sweeper pays market price for the call or put option instead of placing a bid, which sweeps the order book of multiple exchanges to fill the order immediately.

These types of option orders are usually made by institutions, and retail investors can find watching for sweepers useful because it indicates “smart money” has entered into a position.

The DIS Trades: Below is a look at the notable options alerts, courtesy of Benzinga Pro:

• At 9:43 a.m., a trader executed a call sweep near the ask of 205 Disney options with a strike price of $185 expiring on Sept. 10. The trade represented a $37,720 bullish bet for which the trader paid $1.84 per option contract.
• At 9:48 a.m., a trader executed a call sweep near the ask of 211 Disney options with a strike price of $185 expiring on Sept. 17. The trade represented a $68,575 bullish bet for which the trader paid $3.25 per option contract.
• At 10:11 a.m., a trader executed a call sweep near the ask of 320 Disney options with a strike price of $185 expiring on Sept. 17. The trade represented a $116,800 bullish bet for which the trader paid $3.65 per option contract.
• At 10:12 a.m., a trader executed a call sweep near the ask of 1106 Disney options with a strike price of $185 expiring on Sept. 17. The trade represented a $403,690 bullish bet for which the trader paid $3.65 per option contract.
• At 10:57 a.m., a trader executed a call sweep near the ask of 300 Disney options with a strike price of $185 expiring on Sept. 10. The trade represented a $40,500 bullish bet for which the trader paid $1.35 per option contract.
• At 11:12 a.m., a trader executed a call sweep near the ask of 200 Disney options with a strike price of $185 expiring on Sept. 10. The trade represented a $29,000 bullish bet for which the trader paid $1.45 per option contract.
• At 11:32 a.m., a trader executed a call sweep near the ask of 273 Disney options with a strike price of $185 expiring on Sept. 10. The trade represented a $31,941 bullish bet for which the trader paid $1.17 per option contract.
• At 12:48 p.m., a trader executed a call sweep near the ask of 413 Disney options with a strike price of $187.50 expiring on Sept. 10. The trade represented a $25,606 bullish bet for which the trader paid 62 cents per option contract.