Disney's Troubled Waters

2022年4月22日

DIS has been in a slow decline since March 2021 ATH.

Recent political winds have shifted and Florida is rescinding the "Reedy Creek" special purpose district that's been in place since 1967 following partisan policymaking.

The most recent declines this week are not indicative of the much broader weakening of consumer sentiment, more a doubling down and reinforcement of the economic headwinds corporations are facing in light of rampant inflation and a Federal Reserve that is no longer able to accomodate loose monetary policies.

Given the likelihood of central banks taking dramatic steps in the coming months and major economic indicators screaming correction, it's not surprising to see companies like Disney & Netflix show significant weakness as consumers curtail spending.

This appears to be more of a leading indicator of corporate valuations coming down... similar to the declines at the outset of 2020 before the pandemic really took hold of the global economy.

Expect DIS to test the 200 EMA around $91 in the next two months.

Further bearish price action is expected to the March 2020 $79 level.

Depending on the broader market's direction and significant recession risk, as the Fed begins divesting assets from its balance sheets along with rate hikes not seen in over a decade... Disney may see even further retraction given its reliance on retail consumer spending behaviors.

Recent relevant market pullbacks:
1. Dot.com bubble w/ ~65% retracement
2. Housing bubble with a near 60% retracement prior to Federal Reserve quantitative easing and near zero interest rates.