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Swing Trade Idea (MCD) – July 18, 2024

Our bearish trade for Thursday, July 18th is McDonald’s Corp (MCD). MCD is part of the Consumer Discretionary Sector, which is pulling back from the top of an uptrend channel and performed at 7.36% over the last month. MCD underperformed relative to its sector over the same period at 2.93%.

MCD is in a downtrend and recently traded into the 200-day SMA to form a triple top at $260. With the Consumer Discretionary sector showing weakness and is likely to pull back, it is very likely that MCD will follow suit and trade lower toward the downtrend channel at $245. We will be playing a Credit Spread that will collect a Premium/Width of over 35%, which is a great risk/reward ratio.

As a close, if MCD were to trade above $265 for multiple days, this would invalidate our analysis and we will consider cutting losses on the trade. We will also consider cutting losses on this options trade if the value of the vertical spread moves above $7.08.