Account
New to ADSS? Open an
account now to get started.
Already have an account?
Add funds to your ADSS account
Account
New to ADSS? Open an
account now to get started.
Add funds to your ADSS account
Asset Watch
Thursday, October 31, 2024
It’s been a rough few weeks for McDonald’s, as an E. coli outbreak across 13 US states has consumers concerned about the health impact and investors concerned about the financial impact.
And although the fast-foot giant surpassed analysts’ Q3 earnings and revenue estimates on Oct. 29, CFO Ian Borden said that customer traffic turned negative after the outbreak was reported.
Is the short-term speed bump a buying opportunity or the start of a new downtrend?
CEO Chris Kempczinski said on the third-quarter earnings call that “While the situation appears to be contained, and though it didn’t affect Q3 numbers, it’s certainly an important development.” He added, the company is sorry and is committed to “making this right.”
So, while the developments are bearish for McDonald’s fourth-quarter performance, the bad news may be priced in if the outbreak doesn’t worsen.
While the stock initially popped after the earnings release, $300 has become an area of resistance. The bulls may be cautious in this zone until more clarity emerges on the outbreak and its effects.
Consequently, you should keep an eye on the $280 level, as it aligns with various highs and lows over the last several months.
The 20-week moving average (the yellow line) stands near $281 and creates another layer of support near $280. If more bad news surfaces, these levels could help stem the correction.
With the technicals often providing key clues about a stock’s future direction, there are multiple ways to interpret the price action.
McDonald’s fell below its 10-week MA, but if the rising blue line pushes the stock back above $300, the bull market can resume uninterrupted. If not, and the 10-week MA becomes resistance, a drop to $280 near price support and the 20-week MA may unfold.
As a result, you should pay close attention to how the stock trades around these key areas to determine the best entry point.
ADSS
8th floor, CI Tower
Corniche Road
PO Box 93894
Abu Dhabi
United Arab Emirates
Trading Services
ts@adss.com
+971 2 657 2414
Investing in CFDs involves a high degree of risk that you will lose your money due to the use of leverage, particularly in fast moving markets, where a relatively small movement in the price can lead to a proportionately larger movement in the value of your investment. This can result in loses that exceed the funds in your account. You should consider whether you understand how CFDs work and you should seek independent advice if necessary.
ADS Securities L.L.C – S.P.C (“ADSS”), a limited liability company – sole proprietorship company incorporated under United Arab Emirates law. Registered under Commercial License No.1190047. ADS Securities L.L.C S.P.C is regulated and authorised in the UAE by the Capital Market Authority (CMA) under Category 1 License No.305027 (Trading Broker, Trading and Clearing Broker, Trading Broker in the International Markets, Trading Broker of OTC Derivatives and Currencies in the Spot Market, Financial Products Dealer) and Category 5 License No.20200000217 (Introduction). Registered Office: 8th Floor, CI Tower, Corniche Road, P.O. Box 93894, Abu Dhabi, United Arab Emirates.
The information presented is not directed at residents of any particular country outside the United Arab Emirates and is not intended for distribution to, or use by, any person in any country where the distribution or use is contrary to local law or regulation.
ADSS is an execution only service provider and does not provide advice. ADSS may publish general market commentary from time to time. Where it does, the material published does not constitute advice, or a solicitation, or a recommendation to a transaction in any financial instrument. ADSS accepts no responsibility for any use of the content presented and any consequences of that use. No representation or warranty is given as to the completeness of this information. Anyone acting on the information provided does so at their own risk.
