Market has rallied and has hit all time high and with recent bad news on job market, market has not reacted to it. On Friday Dow was down only about 40 points. This behavior is acceptable at the beginning of a pullback. traders consider it as a buying opportunity which is wrong ad then market drops more. Expect a down week for coming week (4/7 to 4/12). Since I am following MCD, I believe it has rallied recently a lot and considering some facts, we should expect it to drop to $95 and below soon. Here are some of the facts: 1- Chart shows that th rally is extended and we should see a pullback 2- Market rally is exhausted 3- Global Economy slowdown 4- Euro rally vs. Dollar 5- We have 3 months to next ex dividend date and it makes MCD a safer short. 6- High P/E of 18. This is a high P/E for restaurant sector. There are other overvalued restaurant stocks like PNRA which I am not following. Generally restaurant index is overvalued. I would short MCD at this level but maybe the safer be would be to reduce the long position and wait for a pullback.
I am sticking to my gun on MCD. Don't get caught in Gold and AAPL. In a couple of days MCD will announce the numbers and it will be an ugly number with a gloomy outlook. It is not only tech. Restaurants and retailers are not doing that good. In Tech stocks ADI will also have a miserable quarter. Check out its chart. It is in down trend.
Today (Friday 4/19) is the confirmed day to short MCD. After earnings and it is trading below $100. 3 to 5% grwoth a year in the best case should not have a P/E of 19. This stock can easily drop to 70 based on the valuation. By the way you are shorting this stock at its high. DYODD.
By the way shorting MCD as of now would be a safe bet because it is not like HLF that could swing wildly and hurt you. The swings are in the expected range. You can also short it as a hedge against your other long S&P and Dow index positions.