Walt Disney Co. (DIS): When the Market Tries Your Patience
When prices go flat, recognizing this Elliott wave pattern can help save your sanity
by Nico Isaac
Updated: January 05, 2018
On December 26, reality TV megastar Kim Kardashian posted an unusual picture to her Instagram account. Instead of the typical, scantily-clad selfie, Kardashian's 100-plus million Instagram followers saw a photo of a... stock certificate for Walt Disney Company?!
The piece of paper, embossed with Disney characters from Winnie the Pooh to Dumbo the Elephant read: "This certifies that Kim Kardashian West has received a gift from her husband [rap mogul Kanye West]... of 920 shares worth approximately $100,000."
Talk about the "happiest place on earth."
But very few of us in the "real-real" world are gifted six-figure "stock"ing stuffers to one of the world's largest and most venerated companies. Most investors and traders would be delighted by the "gift" of staying on the right side of a market's price action. Period.
Markets spend less time in smooth, enduring up and downtrends than they do in complex, volatile, persisting sideways trading ranges that try your patience and prompt a premature rush for the exit... just when the trend is set to turn.
Some traders consider that kind of crawling, coiling price movement a lost cause. Our senior market analyst and Trader's Classroom instructor Jeffrey Kennedy considers it a time for opportunity -- because it indicates that a high-confidence Elliott wave pattern may be underway: a triangle.
Triangles are usually sideways moves labeled A-B-C-D-E and characterized by these telltale traits:
- Each wave must subdivide into a 3-wave move
- A triangle usually occurs in the wave 4 position Triangles always precede the final move of the larger wave sequence and therefore act as "warning signs" that the bullish party/bearish vigil is almost over
- Triangles are usually followed by a strong "thrust" in the direction of the previous trend, to complete the larger pattern
There are many types of triangles, the most common being the contracting variety pictured below.
So, now that we know what a triangle is, let's go back to talking about Walt Disney Co. In the September 19 Trader's Classroom episode, editor Jeffrey Kennedy showed a chart of DIS that indicated prices were potentially unfolding in wave C of a multi-year long triangle.
Go ahead and listen to Jeffrey walk subscribers through his triangle interpretation via this clip from the September 19 Trader's Classroom. Simply press play and follow along.
The chart below moves forward in time and shows how DIS followed the path outlined by Jeffrey:
- First, prices moved moderately lower in non-dramatic fashion
- Followed by a rally in wave D
On January 3, I reached out to Jeffrey and asked him whether price action in DIS continued to support his analysis from last fall. His reply:
"Yes I still like the triangle interpretation :). "
In the September 19, 2017 Trader's Classroom episode, Jeffrey explains how anyone can use the A-C, B-D trend lines of a triangle to project where a significant turn in price may occur and also to calculate a potential thrust measurement for the final move of the larger pattern.
The enduring value of Elliott wave analysis is clear, from this real-world example -- and from every Trader's Classroom lesson Jeffrey cultivates for his subscribers. They come to you 3-5 times a week, and include instant access to the last THREE months of archived Trader’s Classroom lessons.
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