A Top Technical Analyst's Take On Disney, Netflix

The following is a preview of CNBC contributor Matt Maley's daily research reports from his Marketfy channel Beyond The Fundamentals Now (BTFNow).

Disney+ And Netflix

Walt Disney Co DIS saw an upgrade last week as Morgan Stanley touted the potential of its upcoming Disney+ streaming business.

We've also heard some other Wall Street pundits say their Disney+ business is going to cut into the profits of Netflix, Inc. (NFLX).

Disney Technical Analysis

We can't speak much to the fundamentals, but there is no question the buy DIS/sell NFLX swap has a lot of potential on a technical basis.

As Matt Maley discussed on CNBC yesterday afternoon, along with Gina Sanchez of Chantico Globa, the Disney chart looks quite good. It has been stuck in a sideways range for almost four years, and it broke significantly above that range after the company reported earnings in April.

Buy Or Sell?

When Disney finally pulled back during May, when the rest of the market declined, it did not even come close to falling back within that multiyear range.

So the action in this stock remains positive.

Consider Holding Back

We do have to admit that the stock is getting a bit overbought, so it might need to take a “breather” to work off this condition over the short-term. If Disney it can break above its late April highs — either now or after a “breather” — it will mean it had followed the move above its multiyear sideways range with a nice “higher-low/higher-high” sequence, which would confirm the breakout in the stock.

Netflix Technical Analysis

As for Netflix, the stock has done nothing since mid-January and is now testing its 200-day moving average (DMA) to the downside.

The 200 DMA has provided rock-solid support for the stock over the past five months, so any material break below that line would be quite negative for the stock.

We don’t want to get ahead of ourselves on this one.

Buy Or Sell?

Unlike Disney, Netflix has not broken out of its sideways range yet, so it’s definitely going to take a meaningful break below that 200 DMA to raise a red warning flag on the stock. If it does indeed break below that line, investors may consider swapping out of that name and moving into Disney

Very simply, this swap looks quite good on a technical basis.

Screenshot courtesy of CNBC.