McDonald’s Corp (NYSE: MCD)

McDonald’s Corp. engages in the operation and franchising of restaurants. It operates through the following segments: U.S.; International Operated Markets; and International Developmental Licensed Markets and Corporate.

Take a look at the 1-year chart of McDonald’s (NYSE: MCD) with the added notations:

1-year chart of McDonald’s (NYSE: MCD)

During the March drop, MCD temporarily found support at $170 (red). After finishing the decline, the stock rallied back up and repeatedly hit that same $170 level as resistance. That mark has become an important inflection point for MCD.

The Tale of the Tape: MCD broke support at $170. A trader could enter a short position on any rallies up to or near $170 with a stop placed above the level. If the stock were to break back above the $170 level, a long position might be entered instead.

Before making any trading decision, decide which side of the trade you believe gives you the highest probability of success. Do you prefer the short side of the market, long side, or do you want to be in the market at all? If you haven’t thought about it, review the overall indices themselves. For example, take a look at the S&P 500. Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.

No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade. Capital preservation is always key!

Good luck!
Christian Tharp, CMT