Market Pressure Puts Disney Stock Below 50-Day Before Earnings

Disney reports earnings post-close on Tuesday, and the shares have recently struggled after releases

Walt Disney Co (NYSE:DIS) has been one of the best Dow stocks in 2019 thanks to incredible success at the box office. The shares are being hit by the market weakness today, however, last seen down 2.5% at $138.16. At this level, DIS is set to close below the 50-day moving average for the first time in four months, and seasonal data is working against the media concern, as well. Data from Schaeffer's Senior Quantitative Analyst Rocky White shows Disney has averaged a loss of 3.8% in August during the past 10 years, and has only ended the month higher 30% of the time.

This comes as the blue chip prepares to report earnings after the close tomorrow, Aug. 6, and despite Disney's success on the charts this year -- up 26% year-to-date -- its after-earnings performances have actually been mostly disappointing. The shares have closed the day after earnings in the red in six of the past eight quarters, including a 2.2% drop last August.

Maybe even more notable is the earnings swing Wall Street is expecting this time around. DIS has averaged a move of just 1.7% the session after earnings in the past two years, but this time around speculators are pricing in a 7% swing for Wednesday's trading.

In today's action, weekly options are seeing accelerated trading. New positions are opening at the weekly 8/9 140- and 145-strike calls, and the former contracts could be seeing sell-to-open activity, hinting at some skepticism from short-term traders who'd be eyeing the strike as potential technical resistance. Peak front-month open interest, meanwhile, stands at the far out-of-the-money August 200 call.