DeSantis Can't Stop Disney From Moving Higher On A Break Of This Level: The Bull, Bear Case

Walt Disney Co DIS was trading slightly higher on Monday amid an ongoing battle between the company’s board and Florida Governor Ron DeSantis.

Tensions have been rising since DeSantis discovered that Disney approved an agreement in early February allowing the company to bypass an oversight board that the governor had previously appointed, according to a report.

On Thursday, DeSantis escalated his attack on Disney during a speech in Michigan at Hillsdale College, stating that Disney’s move would not allow it to avoid state laws, according to Reuters.

"They are not superior to the people of Florida. And so come hell or high water, we're going to make sure that policy of Florida carries the day," DeSantis said.

Disney’s stock hasn’t reacted to the political issues surrounding DeSantis and Disney CEO Bob Igor, who has responded to the governor, calling the state's laws “anti-business,” according to the outlet.

The stock has been consolidating mostly sideways under the 200-day simple moving average (SMA), and may be forming a bull flag pattern under that level.

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The Disney Chart: Disney’s possible bull flag pattern started to form on March 24, with the pole created between that date and April 3, and the flag formed over the three trading days that followed. On Monday, Disney was attempting to break up bullishly from the pattern, trading just under the 200-day SMA.

• The 200-day SMA is an important bellwether indicator of whether a stock is trading in a bull or bear cycle. A stock is unlikely to break up or down from the 200-day SMA on the first attempt and because Disney has been consolidating under the area for a period, the more likely scenario is that the stock eventually breaks up from the area.
• The measured move of the bull flag pattern is about 8%, which suggests that Disney could climb up toward the $107 mark if the stock can clear the 200-day. If that happens, the 50-day SMA will remain above the 200-day SMA, which is bullish.
• Bearish traders want to see Disney continue to reject the 200-day and then for big bearish volume to come in and break the stock down under the eight-day and 21-day exponential moving averages, which could accelerate a move to the downside.
• Disney has resistance above at $100.90 and $108.50 and support below at $92.71 and $85.76.

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