Will Wall Street Change Its Tune On Soaring McDonald's Corporation (MCD)?

From a contrarian standpoint, McDonald's Corporation (NYSE:MCD) could still have room to run

Apr 1, 2016 at 1:53 PM
facebook X logo linkedin


McDonald's Corporation (NYSE:MCD) shares continue to move higher. For the third consecutive day, MCD has hit a record high, earlier reaching $127.39. The stock was last seen up 1% at $126.98, recently blowing past the $125 area that had been holding back the shares since late January -- making the $130 level the next round-number target. This recent rally began with a jump from MCD's 80-day moving average in March, during which the shares jumped 7.2%. 

Yet, the stock may have more room to run, due to the overwhelmingly bearish sentiment backdrop on Wall Street. Starting with analysts, the majority still consider the shares a "hold" or worse, and MCD's recent show of strength puts it above its average 12-month price target of $126.41. In other words, there's potential for positive analyst notes to push the stock higher -- which is exactly what has been happening lately

Things are even more bearish in the stock's options pits. For instance, at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), 2.62 MCD puts have been bought to open for every call during the past two weeks. This 10-day put/call volume ratio tops 97% of all readings from the past year, meaning option traders have been way more bearish than normal recently. Of course, some of this could be from shareholders hedging their positions amid the stock's surge. 

Speaking of options, it's worth noting that premium on MCD short-term contracts is relatively low right now. This is according to the stock's Schaeffer's Volatility Index (SVI) of 14%, which is just 2 percentage points from an annual low. To put it differently, the options market is pricing in very low volatility expectations for short-term MCD options right now. 

Another indicator to watch going forward is McDonald's Corporation's (NYSE:MCD) 14-day Relative Strength Index (RSI). Right now, this reading stands at 69 -- just a hair from overbought territory.
 

Target Effortless Triple-Digit Gains Every Sunday Evening For Life!

This is your chance to triple your profit potential on Sunday evenings, without spending all your free time watching the market.

On Sundays, as a Weekend Plus subscriber, you’ll get up to 6 trades every Sunday, each targeting gains of 200% or more.

Start targeting gains like the ones our subscribers have seen recently, including:

213.3% GAIN on AutoNation calls
100.0% GAIN on Monster Beverage calls
100.4% GAIN on Walgreens Boots Alliance puts
100.4% GAIN on ON Semiconductor calls
257.7% GAIN on Dell calls

101.0% GAIN on Apollo Global Management calls
103.6% GAIN on JP Morgan  Chase calls
105.3% GAIN on DraftKings calls
101.3% GAIN on Airbnb calls
203.0% GAIN on Shopify calls
102.0% GAIN on Cboe Global Markets calls
100.9% GAIN on Boeing calls
102.1% GAIN on Microsoft puts
102.3% GAIN on First Solar calls
101.5% GAIN on PulteGroup calls
101.0% GAIN on Apple calls
209.4% GAIN on NXP Semiconductors calls
100.8% GAIN on Uber Technologies calls
100.4% GAIN on Academy Sports and Outdoors puts
102.2% GAIN on Trade Desk calls
100.8% GAIN on DoorDash calls
100.0% GAIN on Camping World Holdings puts
100.0% GAIN on Cboe Global Markets calls
100.2% GAIN on C3.ai calls
238.5% GAIN on Oracle calls

 
 
 


 
 

Rainmaker Ads CGI