Dow Jones Industrial Average component McDonald's Corp. (MCD) reported their second-quarter results Tuesday morning and the stock is trading higher off the numbers as sales grew despite menu price increases.
However, despite the stock trading higher, the overall pattern shows weakness.
Let's place our order and check the charts and indicators.
In the daily bar chart of MCD, below, we can see how the shares have "rolled over" a number of times since April. Rallies have not been sustainable. MCD is retesting the 200-day moving average line and is not far above the 50-day moving average line. Closes below both of these averages will weaken the picture.
Trading volume has been dull in July. The On-Balance-Volume (OBV) line has quietly rolled over like prices. The Moving Average Convergence Divergence (MACD) oscillator has crossed to the downside for a take profit sell signal.
In the weekly Japanese candlestick chart of MCD, below, we can see that the shares are struggling to stay above the 40-week moving average line. Trading volume has declined the past five months. The weekly OBV line shows a decline from November.
The MACD oscillator is barely above the zero line.
In this daily Point and Figure chart of MCD, below, we can see a potential upside price target in the $301 area. A trade at $245.76 will start to weaken this chart, I believe.
In this weekly Point and Figure chart of MCD, below, we see a similar picture as the daily chart above.
Bottom-line strategy: Traders should take a cautious approach to shares of MCD.
