Netflix Soared As Disney Sank. But Are The Tides About To Turn?

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Netflix Soared As Disney Sank. But Are The Tides About To Turn?

stock :: 2024-11-28 :: source - ibd

Pixabay / Yousafbhutta

By MATTHEW GALGANI

After Netflix (NFLX) stock bottomed in May 2022, shares went on a tear, surging 458% until they notched a record high this month. During that time, however, Disney (DIS) stock sank as Netflix climbed.

Now it wants to rekindle its former magic.

With clear signs of strong demand and a big earnings boost, Disney stock is gearing up to launch a new move — with one advantage over its streaming rival. And as Disney takes aim at a buy point, the House of Mouse has sneaked onto Investor's Business Daily's Breakout Stocks Index.

Disney Stock Has A 'Youth' Advantage Over Netflix

At 101 years old, the Walt Disney Company is hardly young. But in terms of its base count, Disney stock has a youth advantage over Netflix.

While making its incredible run, Netflix stock has formed multiple bases since 2022. Its latest breakout in August was from a fourth-stage pattern. Such later-stage bases entail more risk than first- and second-stage setups.

Disney stock, on the other hand, is working on a first-stage cup base as it rises nearly 2% Wednesday. The buy point is 123.74.

Prior to this new formation, Disney crafted a long and deep cup with handle. After clearing the buy point in that base, the entertainment giant soon retreated, entering another multimonth slump.

But Disney has now found new life, boosted by rising profits in its streaming business.

Demand Driving Disney Stock

On Nov. 14, Wall Street's enthusiasm for shares was evidenced a by heavy volume gap-up on earnings. Since then, the stock has held and built on that one-day gain of more than 6% as it closes in on a new buy point.

Other indicators of institutional demand include an A- Accumulation/Distribution Rating and a stellar 2.2 up/down volume ratio.

In a sign of rising technical strength, Disney's 50-day moving average stands poised to cross back above its longer-term, 200-day line. Plus, its relative strength line has spiked as Disney stock moves toward a breakout.

Netflix stock has also garnered strong demand. It sports a B+ Accumulation/Distribution Rating and a 1.6 up/down volume ratio. The streaming pioneer could certainly keep climbing, but its already huge run calls for caution, particularly for investors not sitting large profit cushion.

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The IBD Breakout Opportunities (BOUT) exchange traded fund from Innovator Capital Management tracks the IBD Breakout Stocks Index. As with other index ETFs, this fund allows you to invest in the entire index in addition to, or rather than, buying individual stocks. Learn more here about the ETF and Innovator.

Follow Matthew Galgani on X (formerly Twitter) at @IBD_MGalgani.