First, it's not helping that the consumer discretionary sector is down more than 10% over the past three months. This sector weakness has manifested itself in a very weak three month performance in Walt Disney (DIS) shares, which have fallen more than 15%. Currently, DIS trades near a critical price support zone from 90-95 and its relative strength vs. the S&P 500 is closing in on its long-term uptrend line. Loss of both price and relative support would be very bearish for the stock, especially if accompanied by heavy, confirming volume. Take a look at the chart:
The double top at 120 will serve as critical resistance should DIS recover its recent losses. However, the rotation away from aggressive areas of the market and the heavy selling volume on DIS suggests distribution and a likely break of support. Respect the 90 level.
Happy trading!
Tom
