PreMarket Prep Stock Of The Day: Disney

Benzinga's PreMarket Prep airs every morning from 8-9 a.m. ET. During that fast-paced, highly informative hour, traders and investors tune in to get the major news of the day, the catalysts behind those moves and the corresponding price action for the upcoming session.

On any given day, the show will cover at least 20 stocks determined by co-hosts Joel Elconin and Dennis Dick along with producer Spencer Israel.

One of the most popular reopening stocks, Walt Disney Co. DIS reported earnings after the close on Thursday. Its corresponding price action makes it the PreMarket Prep Show stock of the day.

157% Gain From March Low To All-Time-High: After ending 2019 at $144.63, Disney cratered with the broad market and finally bottomed at $79.07 last March. That low coincided with its October 2014 low of $78.54. By early December, it was back above its former all-time high ($152.97) and the pace of the rally began to accelerate.

Instigated by an explosion in new Disney+ memberships and the easing of the pandemic, the issue crossed the $200 level, peaking this March at $203.02. Since reaching that elevated level, a steady stream of profit-taking has nudged the issue to its current level.

It should be noted the issue has its lowest level since making that all-time in Friday’s session.

Mixed Q1 Report: After the close on Thursday, Disney reported revenue of $15.61 billion, which was short of the $15.87 billion analysts were expecting. The company also reported lower-than-expected subscriber counts for its streaming service. Disney earned 79 cents per share excluding items, which was ahead of the 27 cent per share profit the Street was expecting.

Based on Friday’s price action, the revenue miss and the lower than expected subscriber count have overshadowed the EPS beat.

PreMarket Prep Take: When Disney was being covered on the show, the issue was trading at the $171 area. Dennis Dick emphasized it was long-term bullish, but based on recent price action, he was waiting for a lower entry point, perhaps in the $150-$160 area.

The author of this article focused more on the short-term price action and noted from the premarket action and the after-hours trading on Thursday, had one thing a common: a buyer at $169.

Price Action: After a lower open, it rallied to $173.02 and reversed course. The ensuing decline took the issue just beyond the aforementioned support level ($169), falling to $168.78 and reversed course. Since making that low, it has rebounded to $172 area as of 11 a.m. ET.

Moving Forward: As the issue has reached its lowest level since making its all-time high and so far has staged a rebound, the question remains is the low of the retreat in? If so, then attempting a long at this level, a breach of that low may signal an exit in the issue.

If that's breached, as well as its February low ($168.03), its next month support level is down at the yearly low of $160.52.