8 Takeaways From McDonald's Chart

By Schaeffer's Investment Research May 24, 2013 2:40 pm

Despite MCD's recent strength, analysts are lukewarm toward the stock as 10 out of 21 maintain "hold" ratings.

Today’s chart is of McDonald’s Corp. (NYSE:MCD), which franchises and operates McDonald’s restaurants in the global restaurant industry. Its restaurants offer various food items, soft drinks, coffee, and other beverages. The company operates approximately 34,000 restaurants in 120 countries around the world.

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Recommendation: Long

What I Am Looking At:

Performing quite well this year, up nearly 14% year-to-date.

Made a new all-time high in mid-April after crossing up through the century level.

Consolidating just above the round number $100 level in a symmetrical triangle formation, which could be considered a continuation pattern.

Peak put open interest for the June series resides at the 100-strike, which could be supportive.

RSI oversold.

Short interest has been declining, an indication shorts are in cover mode as shares trade near all-time highs.

Despite MCD’s recent strength, analysts are lukewarm toward shares as 10 out of 21 maintain “hold” ratings, potential for future upgrades.

10-day buy-to-open put/call ratio ranks in the 83rd percentile of all readings taken during the past year, an indication of pessimism among option participants.

Strategy: Buy at current level as shares could be supported from the trendline, $100 level, and peak put open interest. Or wait for a potential breakout of triangle pattern.

This article by Tony Venosa, CMT, was originally published on Schaeffer's Investment Research.

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