Thinking about a Big Mac? Here’s your trade on McDonald’s ($MCD) (September 12, 2019)
MCD DJ-30 MCD RWDNX WEN S6UX MCD
Let’s look at McDonald’s ( NYSE: MCD ), this is why: We look at the Dow ( INDEXDJX: .DJI ), the Dow ( INDEXDJX: .DJI ) is up close to an all-time high but it is also looking a little sloppy. A lot of things in the market just look kind of tired. I am neither bull or bear, I am agnostic, I just have to kind of have to trade what I see and hopefully apply some experience to it.
I want to show you what could turn out to be a pretty good short, not just yet though. We have McDonald’s ( NYSE: MCD ) and so many of these other companies; Wendy’s ( NASDAQ: WEN) imploded, Starbucks ( NASDAQ: SBUX ) imploded, even Chipotle ( NYSE: CMG ) got crushed like that. But with McDonald’s ( NYSE: MCD ), this is what I am looking at; first of all, it is a Dow ( INDEXDJX: .DJI ) component so that matters. After this big sell-off I think a lot of traders, the newer traders who haven’t had all their money taken away from doing this, will short the stock because they just think it is going to keep going straight down. What happens instead is, the stock does what it has done over the last couple of days, which is move higher. But I think the shorting opportunity is pretty close to now, just not quite. Maybe in the next day or two but this is what you want to look for here so we will set this up.
What you want to look for is, the 50-day moving average is this, the closer the stock it gets to the 50-day moving average the lower the risk of the trade is. This is why because what you want to do is, you want to wait for the stock to move higher. And then when it has a down day, when it has it’s first negative day, that’s when you can look at this and say, “Okay, break down, rebound to try to recover. Failed recovery because the stock was not able to get above the 50-day moving average. So I will short here, short there even, but short somewhere on this red bar. And then what I will do to protect myself just in case I’m wrong,” and there is a chance that you could be wrong, “I will keep a protective stop right up here. So if the stock runs above, say, 218.00, that might be a little loose, but if the stock runs up above here then I am out of the stock, I’m out of the short.”
This is not something that you want to do tomorrow, but watch this stock and if it sets up like that I think it could be a really good trade for you. There is your plan for shorting McDonald’s ( NYSE: MCD ).
Free Chart