McDonald's Corp. (MCD) reported earnings late last month and the shares have weakened.
Every time I go out on an errand I pass one or two local McDonald's. I do an unscientific channel check by looking at the number of vehicles in the parking lot and in the drive-up window. The parking lot looks like it is thinning out a bit and that is in the back of my mind as I look at the charts.
In the daily bar chart of MCD, below, I can see that the shares have declined from a high in November. MCD is trading below the declining 50-day moving average line but above the rising 200-day line. The trading volume has increased in recent weeks and suggests that traders are voting with their feet.
The On-Balance-Volume (OBV) line was stalled in November through January and looks like it has turned weaker in February. The Moving Average Convergence Divergence (MACD) oscillator is slipping below the zero line.
In the weekly Japanese candlestick chart of MCD, below, I can see a longer-term uptrend but beneath the surface the indicators I favor have been weakening. Prices are above the rising 40-week moving average line. There are some small upper shadows above $270.
The weekly OBV line has been weak the past three months. The MACD (some call this MAC-D which sounds close to a trademark issue) oscillator has struggled since early 2022.
In this daily Point and Figure chart of MCD, below, I can see a potential upside price target in the $319 area. A trade at $228 may be needed to weaken this picture.
In this weekly Point and Figure chart of MCD, below, I can see that the software is projecting the $205 area as a potential downside price target.
Bottom-line strategy: I went on a road trip a couple weeks ago and had lunch in a McDonald's right off the highway. I was a bit shocked by the cost of two meals. It is not technical analysis but I suspect that even MCD will suffer a bit as a potential recession impacts consumers' ability to get their fast food fix. Avoid the long side of MCD for now.
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