McDONALD'S CORP (MCD) - ARE INVESTORS GOING TO BE LOVING IT?
Background: MCD McDonald's Corp. Services | Restaurants | USA
McDonald's Corporation operates and franchises McDonald's restaurants in the United States, Europe, the Asia/Pacific, the Middle East, Africa, Canada, and Latin America. The company's restaurants offer various food products, soft drinks, coffee, and other beverages.
McDONADL'S Corp (MCD) make a big thing in its adverts with a tagline "I am loving it". Are investors going to be loving it too?
It is the largest by market cap and has the highest daily volume of constituents in restaurant group. The nearest competitors are:
YUM Brand Inc (YUM)
WENDYS Co (WEN)
Others are relatively much smaller in market cap and low daily volume. Nevertheless they still show similar outlook on price charts. Charts of YUM and WEN with notes are shown below
Summary of technicals:
1. Part of Consumer Discretionary sector which enjoyed strong run leading into recent top as can be seen in sector EFT XLY has no run into potential resistance at 261.8% Fib extension of the swing 2007 high ton 2009 low. At this level there is potential triple top being formed with associated RSI divergence and possibly break of rising support trendline.
2. Could be showing early signs of possible weakness against broader market which also is likely topping and could experience reversal.
3. It appear that MCD probably completed larger 5 wave cycle commence prior to 1969 (see monthly chart below).
4. There is associated RSI divergence between wave iii and v of larger wave 5 and is showing significant weakness Vs the SP500 on ratio chart of MCD/SP500
5. Wave 5 = 238.2% x Wave 3 and price has reached to close proximity of that level.
6. If correct then we could at least see MCD correct to $80 area being the level of wave iv of one degree lower as the initial target.
Conclusion:
Despite MCD having enjoyed a good run to it recent high yet it has been underperforming broader market which itself is in process of topping. MCD has potential to drop to around $80 in due course.
Action:
Consider buying Jan 2017, $87.5 PUT being quoted $0.69 - $83 a spread of 14cents. a fill around $0.70 would be reasonable.
A drop to $110 would net us 2 x our initial risk and at $100 we could be close to 4 x our risk.
Warning: This is my interpretation of price action using TA approach that I consider helps me the most but could be completely wrong. Therefore as always, please do your own analysis for your trade and risk management. You should follow this on Paper Trading Account till you feel confident to apply the skill to a live account.
DanV
danv-charting.com
McDonald's Corporation operates and franchises McDonald's restaurants in the United States, Europe, the Asia/Pacific, the Middle East, Africa, Canada, and Latin America. The company's restaurants offer various food products, soft drinks, coffee, and other beverages.
McDONADL'S Corp (MCD) make a big thing in its adverts with a tagline "I am loving it". Are investors going to be loving it too?
It is the largest by market cap and has the highest daily volume of constituents in restaurant group. The nearest competitors are:
YUM Brand Inc (YUM)
WENDYS Co (WEN)
Others are relatively much smaller in market cap and low daily volume. Nevertheless they still show similar outlook on price charts. Charts of YUM and WEN with notes are shown below
Summary of technicals:
1. Part of Consumer Discretionary sector which enjoyed strong run leading into recent top as can be seen in sector EFT XLY has no run into potential resistance at 261.8% Fib extension of the swing 2007 high ton 2009 low. At this level there is potential triple top being formed with associated RSI divergence and possibly break of rising support trendline.
2. Could be showing early signs of possible weakness against broader market which also is likely topping and could experience reversal.
3. It appear that MCD probably completed larger 5 wave cycle commence prior to 1969 (see monthly chart below).
4. There is associated RSI divergence between wave iii and v of larger wave 5 and is showing significant weakness Vs the SP500 on ratio chart of MCD/SP500
5. Wave 5 = 238.2% x Wave 3 and price has reached to close proximity of that level.
6. If correct then we could at least see MCD correct to $80 area being the level of wave iv of one degree lower as the initial target.
Conclusion:
Despite MCD having enjoyed a good run to it recent high yet it has been underperforming broader market which itself is in process of topping. MCD has potential to drop to around $80 in due course.
Action:
Consider buying Jan 2017, $87.5 PUT being quoted $0.69 - $83 a spread of 14cents. a fill around $0.70 would be reasonable.
A drop to $110 would net us 2 x our initial risk and at $100 we could be close to 4 x our risk.
Warning: This is my interpretation of price action using TA approach that I consider helps me the most but could be completely wrong. Therefore as always, please do your own analysis for your trade and risk management. You should follow this on Paper Trading Account till you feel confident to apply the skill to a live account.
DanV
danv-charting.com
