10/26/99
McDonalds Corp (MCD)
Points to watch: McDonald's
shareholders would have been well advised to have sold during the stock's
February peak this year. The shares are on the verge of confirming a
long term top on the weekly chart.
Last
week McDonald's closed below its 55 week moving average for the first time
since February 1998, and yesterday they failed to hold Gann angle support
at 39.5, closing the day at 39.13 after traveling as far south as 38.31
during the day. Major long term support exists at 37.75, a level
which provided support in January and May of this year. A fall below
this support level would confirm the long term top that has formed on the
weekly chart.
Technical indicators
have generally looked as poorly as the stock has over the past 7 months,
confirming the negative outlook. During the stock's May-July rally
attempt, weekly MACD, RSI and daily OBV were left lagging
behind. OBV remained flat during the 2 month rally, and has now
turned sharply lower. RSI failed to move above 55 during the rally
attempt, adding confirmation that the rally was little more than a dead
cat bounce.
A strong long term
sell signal would be given if these shares fail to hold support at 37.75.
