Disney Beats on Earnings and Continues to Grind Higher

Published on Wednesday, 08 February 2012 17:01 Written by David Becker

Disney (NYSE: DIS) reported earnings after the bell on Tuesday, beating expectations.  The company reported earnings of 80 cents per share, compared to the 72 cents expected by analysts. According to DIS increased attendance at the parks, and higher advertising rates drove the earnings upside.  Unfortunately, revenue fell short of analyst expectations at $10.779 billion, compared to the $11.18 billion Wall Street was expecting.

The stock has been on a nice run for most of 2012 climbing higher by more than 10%.  After consolidating for most of the month, the stock broke out of a range that was capped by resistance near 40.25.  The general up trend since October of 2011, was confirmed when the 50-day moving average crossed above the 200-day moving average in mid January.  Resistance on the stock price is now seen near the highs made in February of 2011 near 42.30.  Support on DIS is seen near the 20-day moving average, which is seen near 39.40.

The relative strength index (RSI), has moved into an overbought region, climbing above 70 for the first time since January.  In the last instance of a move above 70, the stock consolidated grinding lower by less than 3%.

The MACD (moving average convergence/divergence index) is painting a bullish picture.  The spread between the 12-day moving average and the 26-day moving average has just crossed above the 9-day moving average of the spread.  This is usually a solid bullish signal as the index moved above the zero line.  As the spread begins to widen, momentum is likely to continue to increase, as the stock gains upward momentum.

Volume on DIS also picked up as the stock price continues to move higher.  This type of confirmation indicator is usually positive for a stock price.