Can McDonald's Maintain Its Appetite for Upside?

The shares have rallied ahead of earnings so the results need to really beat estimates to keep it going.

McDonald's Corp. (MCD) did not look appealing on September 27 when we wrote that "The downside price targets currently for MCD on the two Point and Figure charts are not terrible but they mean that the stock could retest its June low and one never knows whether the prior low will hold or break. I would remain defensive on MCD shares."

Let's order up some new charts ahead of the company's earnings on Thursday morning.

In the daily bar chart of MCD, below, we can see that the "big picture" for shares of MCD is a large sideways trading pattern. MCD stayed weak into early October but then prices staged a brisk rally. MCD has closed above the 50-day and the 200-day moving average lines. The slopes of both lines are negative so it will take a longer rally to turn the slopes positive.

The On-Balance-Volume (OBV) has been moving sideways since March but now shows some improvement. The Moving Average Convergence Divergence (MACD) oscillator is now bullish.

 

In the weekly Japanese candlestick chart of MCD, below, we can see a mixed picture. The shares are still in a longer-term sideways trend. MCD has crossed below and above the 40-week moving average line.

 

The OBV line turned down in late 2021 and its movement has been "choppy" lately. The MACD oscillator is still bearish but could shift upwards to a new buy signal.

 

 

In this daily Point and Figure chart of MCD, below, we can see an upside price target of $331. A trade at $228 would weaken the picture.

 

 

In this weekly Point and Figure chart of MCD, below, we can see the same $331 price target.

 

 

Bottom-line strategy: I have no special knowledge of what MCD will tell shareholders, but MCD has made a brisk rally ahead of earnings so the report needs to really beat estimates to keep going.

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