Time to super size MccDonalds (MCD)? Here’s the trade. (January 28, 2016)
MCD
Let’s a quick look at McDonald’s ( NYSE:MCD ) today. The market has been in a trading range, just look at the Dow real quick and you can see for the last week or so it has been chopping around, but just gently UP. But McDonald’s, after reporting a really good quarter (Breakfast all the time, what could be better than that?) the stock gaps up and pulls back. Buy the rumor, sell the news. But then TODAY the stock goes up to a new high, an all-time high. While all these other stocks are getting killed, old McDonald’s running north. We actually have a bearish position on this currently, still out of the money, but I’ll admit it, we’re wrong. Really I’m wrong, because I’m the one who put it on, I take the blame for it. The stock gapped up, and I really thought it was going to continue to fall into the channel. But it hasn’t done that, instead it’s moving higher. Well, your first loss is always your best loss. so we’re going to pivot on that and go long.
When you realize that you’re wrong, then you need to do something about it, because if you don’t then you are just trading the “hope” strategy. Hope & change is an awesome political slogan, works really well, but for trading, not so much. You don’t want to be relying on that stuff, you’ve got to be objective.
And so, here’s what I see, look at the volume into this rally, into this pop, and now the stock is at an all time high. Do you think there’s maybe SOMEBODY who runs a LITTLE bit more money than me, who’s looking at this saying, “I don’t think I should have sold McDonald’s. I think I’ve got to buy that back.” So my suggestion is, stay long McDonald’s ( NYSE:MCD ). It’s MASSIVELY overextended, WAY overextend on the weekly chart, but if you can scale in, USE any pullback, we see the stock is moving higher, so use any pullback as an opportunity to buy this stock more as an investment.
You never know whether it’s going to pullback or just drift sideways. Being short calls was a nice thing, but now suddenly today you know that there’s buying interest. So you can bet, if the stock does pullback at all, it is going to be met with buyers. Why don’t you be one of those guys?
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