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McDonald's Looking Tasty Long-Term


Strong numbers could make up for so-so chart.


Greetings from New York, where I'm trying to rediscover my stride after a weekend in Las Vegas. We were celebrating Mrs. Jeffmacke's birthday, and while a great time was had by all, there's something about that desert city that makes it hard to get out of a Vegas frame of mind. Kirk Kerkorian selling an F-150 worth of Ford (F) stock just months after buying a huge stake at well above market levels, presumably so he can free up some cash in gaming stocks? Just another leathery guy taking his chips off the table after a bad run and trying to make it back at a table with even longer odds.

Here's what I'm watching and thinking as I slowly make the trip across a seedy casino back to, um, trading stocks:

  • A few trades I've made today, from smaller additions to longer re-entries: The Pro US Dollar UUP ETF ("better than other currencies") and the Double Short S&P 500 SDS ETF ("We're up 14% from the lows when I got on the plane last Thursday? Really?!").

  • I also threw some more chips on the table on my McDonald's (MCD) long, ahead of Micky D's earnings report in the morning. The chart looks somewhat less than dazzling to me but I think the numbers will be strong and I'm constructive on looong term ideas, now that we've lopped 5k off the top of the Dow in the 12-months.

    Another positive factor for MCD, at least on a relative basis: sharply dropping gas and commodity prices and a weak economy. "Fast 'n' cheap" seems like the one consumer space that may weather, or at least withstand, the current storm.

  • A chart which looks a lot like McDonald's and a trade which, eventually, I'll be wanting to put back on the books: Toyota Motors' (TM) stock is up 15 points from recent lows and, in the off chance you need reminding, is in the same industry as General Motors (GM) and Ford. There's a better balance sheet at TM but much, much higher expectations.

  • Speaking of the market's "Quick and Dead" trading Set-Ups: Citigroup (C) was reinstated at Goldman Sachs as a "Sell". Citi is down more than 20% since I slunk out of the long side just last week. The two lessons: 1) You may think you're a "long term investor" but if you catch a double digit move in a position (long or short) in this tape, it's probably time to move along. 2) Goldman is just noticing the structural problems at Citigroup now? This has been as tough a year for research departments as it has been for fundamental managers.

  • Today's addition to the "Stock I will Never Touch, Long or Short" List: Netflix (NFLX). What's it worth to be the best company in a dying industry? I can either ask and study the New York Times (NYT) and Gannett (GCI) or I can avoid Netflix as it finishes off competitor Blockbuster (BBI).

One of the stranger and harder things about talking stocks these days? There is no "real time."

Even pecking away at a Buzz & Banter post leaves you feeling either sheepish about posting "after the fact" winners (UUP, SDS) or silly about discussing trades which are already losing (MCD). With a tape this fast, it's hard to keep folks in front of what's happening on the screen, let alone in your books. In any event, I'm just sharing the process, Minyans. When you do it everyday there's no point trying to convince folks about your abilities, one way or the other. There's more than enough "out there" for folks to judge for themselves.

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No positions in stocks mentioned.

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