Disney’s rally could take a breather as it heads into earnings

Disney has had a magical rally this summer.

The media giant is one of the best performers in the Dow over the last month and is looking to extend its longest weekly win streak in nearly three years.

As it heads into earnings after the bell Tuesday, one market watcher warns of a near-term pullback in Disney shares.

"It's had a nice run over the last two months, so it may need to take a little bit of a breather here," said Matt Maley, equity strategist at Miller Tabak, Friday on CNBC's "Trading Nation." "You might even get a sell the news reaction to its earnings report. But it should only be a short-term thing."

Disney has rallied more than 10 percent in the past month in the best Dow performance behind Apple and J.P. Morgan. Since the beginning of June, it has jumped nearly 17 percent. The stock hit its highest level since November 2015 on Monday.

While a short-term pullback could be in the cards, Maley does see a strong technical picture forming for Disney over the long term.

"The stock is breaking above a multiyear symmetrical triangle pattern and it's done so on a fairly significant basis over the last couple of weeks, so that's very positive," he said.

Maley said Friday that if Disney breaks above its 2017 highs around $115.50 it would confirm a stock breakout that would give upside momentum through the rest of the year. Monday's gains pushed Disney shares above that level.

The company's franchise portfolio makes it a long-term winner to Gina Sanchez, CEO of Chantico Global.

"Disney has obviously their own networks, but they also own Pixar, they bought Lucasfilm, and so really they have expanded themselves into just a blockbuster warehouse of deals, movies," Sanchez told "Trading Nation" on Friday. "If you look at the top-grossing films, over half of the billion-dollar grossing films are actually Disney films."

Half of the top 10 highest-grossing films of 2018 are Disney properties, including "Black Panther" and "Avengers: Infinity War." "Incredibles 2," the third highest-grossing film of the year, had the best domestic box-office opening for an animated film in history.

Disney is scheduled to report on its fiscal third quarter after the bell Tuesday. Analysts surveyed by FactSet anticipate 23 percent earnings growth and 8 percent sales growth.

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Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's “Closing Bell (M-F, 3PM-5PM ET).   In addition, he contributes to CNBCand CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

Follow Michael Santoli on Twitter @michaelsantoli

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