“Magic Everywhere”, is the title of a popular song sung at the Disneyland theme parks, and it does feel like there is “Magic Everywhere” for the Walt Disney Company (NYSE: DIS).
The company’s share price is resting well above the $100 mark right now, breaking the psychological one hundred level, and it seems that only good news is heading their way.
Can we assume that Disney will continue on the right path and still be able to make profits or sustain profitability in the long term? I would say yes.
In the financial world governed by central bankers’ monetary policy and unconventional measures, equities are a more desirable way to invest.
Hedge funds are, for example, supposed to bring a hefty return for their investors each year. How can they do that if bonds continue to show a negative yield? When currencies are moving the way they are right now? Investing in equities now looks like the smart way to go. This is why the worldwide equity indexes are at their all-time highs right now. However, picking a stock to invest in a bullish market is not easy.
From a technical point of view, the breaking of the $100 mark is extremely important, however, our analysis indicates that this may be tested with at least one move below $100 in the future for Disney. That would be the moment when I would favor call options for Disney stock, and I would choose an expiration date that is as big as possible. I recommend waiting for the start of June to buy the option and use an end of June expiration date.
Usually, when such an important level such as the $100 mark is broken for the first time, the pullback is only part of a continuation pattern. This would be either an ascending triangle (a bullish one) or a flat with a failure (extremely bullish in this case).
The Disney theme parks are packed, or overcrowded even. Customers aren’t discouraged by the increased entry prices to the theme parks around the world. Future releases from Lucas Arts (Star Wars Franchise), and the continued popularity of the Marvel Studio films, will only add to Disney’s future profits.
The above are only some examples of the extraordinary ability of Disney’s management to adapt to every challenge they’ve faced in the entertainment business. We can safely assume that they will most likely do so in the future too.
Indeed it is magic.
Disclaimer: Any financial trading analysis offered here is our opinion and is not intended as advice or direction for investors. We cannot guarantee the success of any trades made as a consequence of this article, and we encourage traders to incorporate a strong money management strategy to limit losses when they enter the markets. Please use this article as part of your own research before formulating strategies prior to trading.
