I’ve been watching McDonald’s (MCD) as a short candidate. Technically, it’s all screaming, “sell me” after double top failure. RSI is reversing well off its 70-line. MACD is insanely over-stretched into overbought territory.
Money is flowing out of the name, per Money Flow Index (MFI). The last time, MFI was this high, we saw MCD fall from $96 to less than $90 in no time at all. There’s nothing to get excited about with this name at the moment. Hopefully that changes. But right now it’s an overvalued mess.
There are two ways to trade this.
- One, consider buying to open the MCD May 2015 97.50 put up to $3.60 without risking the house.
- And, or two consider buying to open the MCD June 2015 95 put up to $3.50 without risking the house.
We have to also consider the overall market is a bit over-extended with very little to get excited about.
Also, going forward we’re going to be implementing a -40% stop loss strategy on all trades.
Good Investing,
Ian L. Cooper
Forgotten Profits