We're holding our noses in a tough market and adding to an underappreciated stock

Published Thu, Sep 29 202212:23 PM EDT

We're buying 25 shares of Disney (DIS) at roughly $97.30 each. Following Thursday's trade, Jim's Charitable Trust will own 1,200 shares of DIS, increasing its weighting in the portfolio to 4.39% from 4.3%. Before we get to the reasons behind the Disney add , let's look at what's shaping up to be another tough day for stocks. The markets were selling off Thursday, reversing all of the outsized gains from the prior session. Stocks rallied Wednesday after the Bank of England intervened in the U.K. bond market, a decision that helped stabilize global fixed income markets and facilitated a decline in U.S. Treasury yields, most importantly in the 2-year and 10-year notes. Remember it's the bond market that's in control of equities right now: Stocks tend to fall when yields sharply rise. Bond yields move inversely to bond prices. So after one day of reprieve, the selling in the bond market pushed up yield Thursday and stocks went back into the soup. What didn't help Thursday were the lower-than-expected initial jobless claims number, the hotter-than-expected core personal consumption expenditures price index (PCE) inflation measure, and hawkish commentary on CNBC from Loretta Mester, president of the Cleveland Federal Reserve. All of this added fuel to the Fed's fire that many more interest rate hikes are needed to move into restrictive territory and to get inflation under control. The bear case for stocks is that the Fed will continue to raise rates and crush the economy, while the bulls will point to a Fed that has done enough and should pause to see how the lagging effects of past rate hikes play out. Small Disney buy While the outlook for the economy remains highly uncertain, we are holding our nose and making one small buy, Disney, just like the charts suggest as told on Wednesday's episode of "Mad Money." We also note the S & P Oscillator closed Wednesday around minus 10%, indicating that the market is still heavily oversold despite the one day rally for stocks. Any time the Oscillator moves below minus 4%, it signals oversold conditions in the market, which could mean it's due for a bounce. Obviously, it could still go lower and has. We've been looking to add to our Disney position ever since it reported a fantastic quarter in early August , with operating income for the Theme Parks beating estimates by nearly $500 million and Disney+ subscribers exceeding estimates by about 4.4 million. Though it was tempting sooner due to the great results, we waited because we did not want to violate our previous lowest buy of around $103, which was back in May . This was good discipline. With the stock now down roughly 5% from our lowest buy, we're adding to our position Thursday. As for our bullish case, we believe the Theme Parks will continue to post robust results despite this economic slowdown because people still want to go out and travel and a trip to Disney is usually the last thing a family would ever cancel. Plus, international visitors at the Florida parks are still below pre-Covid levels, providing support on the demand side should see weakness from the U.S. consumer. On streaming, we think management will make good on its subscriber targets and plan to reach profitability in fiscal 2024. We also like the decision to launch an ad-supported tier for the Disney+. Lastly, we continue to believe ESPN is an underappreciated asset and we patiently await for more details surrounding management's plan to incorporate sports gambling into the network. (Jim Cramer's Charitable Trust is long DIS. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust's portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.

Bob Chapek, chief executive officer of Disney, speaks at the 2022 Disney Legends Awards during Disney's D23 Expo in Anaheim, California, Sept. 9, 2022.

Mario Anzuoni | Reuters