MCD has bounced off the bottom of a long term bullish channel and recently broke to the upside of a pennant pattern on the shorter time scale. We are seeing strong resistance in the $200 price area (+/- ~$5) from both historical price action, fib retracement, and psychological resistance. Positive trade news looks like it has yet to significantly impact MCD so this might just be a good time to get in on a long stock position or even a call option trade. Setting a stop loss just below the bottom of the long term bullish channel, and setting a profit zone at the top makes for about a 10:1 profit/loss ratio. Being a dominate multi national brand, a decent dividend, and with investors such as Warren Buffett, this might be a good opportunity to get in on a long term play. Would love to hear your thoughts!
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Stock market continues to rip today on a macro level. MCD gained about .7% closing the day above the pennant and .236 fib. Not completely out of the mud yet on this play. Really want to see $200 broken to confirm bullish momentum. If the macro continues to rip we will break $200. We have to see how MCD reacts when the market slows down to have a better understanding of where this is heading. Still in my position and will continue to hold until i see MCD falling below critical levels around $195
What are your thoughts on today's action? I am holding some february calls, don't like this sideways action much with markets at ATHs.
Mam13016
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@sumtinwong, there are three main things that I am keeping my eye on from a bullish perspective. 1.) Daily candles continue to close above the top of the pennant's upper trend line. 2.) Stay above the .236 fib retracement level at about $195 and 3.) Breaking to the upside of the down sloping neckline of the head and shoulders pattern which is at about $200 and is confluent with the .382 fib level, historical resistance. If we start closing above that neck line that would be a really good sign from a bullish perspective in my opinion. Other than that, bullish momentum has potential to grow on the MACD, RSI has plenty of room to run up and we are still at the bottom of this long term bullish channel. Also, MCD is up about 5% over the last month and a half roughly which is consistent with the macro so I would not worry too much about today's price action and I wouldn't consider this trading sideways. If anything, I think today's price action presents more opportunity for investors and traders and hopefully we will start to see that play out over the next 2.5 weeks. Personally, I have a much longer time frame in mind than Feb. 2020 although and I don't know your strike price or how much you paid for the calls so it is hard for me to comment on that. One last thing to consider on your call options is IV. IV is very low right now on MCD relative to historical levels. If IV begins to rise, which it is more likely to rise than fall IMO, then you could make some good money. Thanks for the comment!
sumtinwong
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@Mam13016, Thank you! I am now even more unsure about the action today, but I really hope it closes aboove the .236 fib level. I have Feb 2020 190 calls that I am still up roughly 20% on, was up around 50% around the highs yesterday. I am hoping this is just an opportunity and not a sell off. It is now at the tip of the pennant it seems as well.
Thank you for taking the time to give a lengthy response @Mam13016!
Mam13016
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@sumtinwong, Today we closed down at 195.63, just a hair below the .236 fib level ($156.66). We bounced pretty well off a historical support at 194.85 which happened to be confluent with the bottom upwards support line of the pennant and the .382 fib retracement (from low of the pennant to high of the current run just above the pennant). We also closed the daily candle basically on the top resistance line of the pennant. I find it interesting that a lot of today's volume came in the last 15 minutes of trading and MCD was ready to close the day above the pennant and .236 fib until the very last minute of trading where we saw a significant fight from the bulls. A huge percentage of the daily volume came in the last 5 minutes of trading and it looked bullish to me. In summary, that last two days of trading have not been glaringly bullish but we also have not confirmed a negative trend reversal either in my opinion. We are at critical levels that will soon determine the very short term fate of MCD that will likely play out in the next 2 trading sessions. Personally, I did not sell my long position today as I want to see what develops tomorrow. Best of luck!