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Fan Yang

Disney (DIS) retreats from critical resistance; where do we buy?

First of all, the title implies I am bullish on Disney (DIS). The rally since late June is a strong indication that the bearish phase from May through June is over. 

DIS 1H Chart 7/13

(click to enlarge)

Bullish Reversal Rally: The rally from 94 to 100.70 broke above a falling trendline and put price above the 200-, 100-, and 50-hour simple moving averages (SMA). 

Key Resistance: As price pushed above 100, DIS faced a recurring resistance in the 100.70-101 area. So far the DIS has retreated from this resistance, showing that bulls are not strong enough to extend the recent rally. 

Key Support: To me, the 96.70-97.60 area is a critical support area if the DIS is to remain bullish. If price drops back to 98, I would consider buying with targets first to 100.70, then 102.50 in the short-term. The 2016 high is just above 106, and I think 106 is in sight for the medium-term (rest of this year).

Reward to Risk: So, with a short-term bearish correction scenario materializing, we might want to consider anticipating strong support around 98. There is about an 8% upside from there with a risk of under 2% if you are wrong about the upside and price breaks below the noted critical support. 

Latest News/Rumors from
Disney's (DIS) ESPN sports channel behemoth, which reportedly agreed recently to acquire a one-third stake in Major League Baseball's video streaming unit, is negotiating as well with the nation's largest online distribution companies to carry its programming, according to two people with knowledge of the talks. The negotiations are believed to include Amazon (AMZN) and Facebook (FB) , both of which are looking to expand the amounts of live programming they offer to consumers.

There is no certainty that the discussions will be successful or that an announcement is near, according to one of the sources. Still, the overtures represent an increased effort by ESPN to diversify the distribution of its rich cache of live sports and other programming beyond cable and satellite at a time when those subscribers continue to dwindle as some consumers "cut the cord" in favor of online video.

ESPN and Facebook representatives had no comment, while an Amazon representative did not immediately return a request for comment.

The talks represent a delicate balancing act for Disney, which has made it clear in public comments that it is leery of upsetting cable and satellite operators that pay the media giant hefty affiliate fees for carrying its cable channels. ESPN is TV's most expensive channel, collecting $6.10 a month for each subscriber, according to research boutique MoffettNathanson.

Disney plans to unveil an online package of programs it will sell directly to consumers, technology site The Information reported in early July. That programming is not expected to include some of ESPN's more valued programming, including professional football or basketball, but could include lesser college sports. Last year, ESPN sold a 49-match package of cricket matches to online subscribers for $99.99, as well as making the matches available to the Dish Network (DISH) satellite service and other cable operators.

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