Walt Disney (DIS) has been correcting lower since mid-2015, but a subtle shift has been underway in recent months. Beneath the surface, fresh accumulation has been happening and today it seems Disney is ignoring news that to me looks/reads bearish. When a stock does not go down on what appears to be bearish news, the news has been discounted and you want to join the buyers.
Look closely at this daily chart of DIS, above. A shift from bear to bull has been evolving slowly since May. As the price of DIS declined from a low in May to a low in August and then September and then again in October, the 12-day momentum study made higher lows on each selloff. This is a major, multi-month bullish divergence.
Now focus on the movement of the On-Balance-Volume (OBV) line in September to now. The OBV line does not follow prices lower; instead it starts to move higher. A rising OBV line tells us that buyers of DIS have become more aggressive. DIS has closed above the 50-day moving average line and soon could close back above the 200-day average line.
In this three-year weekly chart of DIS, above, we see three legs lower from the 2015 peak. Prices are below, for now, the flat 40-week moving average line. The weekly OBV line has turned neutral after a decline and the weekly Moving Average Convergence Divergence (MACD) oscillator is crossing to a cover shorts buy signal -- a buy when prices are still in a downtrend.
Strategy? I would go long DIS near current levels, risking a close below $90. On the upside we could see the $105 level by year end. Look for more gains in early 2017.