On October 24, we said, “Keep an eye on overbought shares of McDonald’s (SYM: MCD). Not only is it technically stretched on RSI, MACD and Williams’ %R, but it’s also slipping on news an E. coli outbreak has been linked to its quarter pounders. All of which could send the stock significantly lower immediate term.”
While it didn’t drop “significantly lower,” it did fall from about $301 to $292.20.
Now oversold on RSI, Williams’ %R and Full Stochastics, it’s time to go long MCD, especially on news its Quarter Pounder has returned to stores impacted by E. coli.
“The issue appears to be contained to a particular ingredient and geography, and we remain very confident that any contaminated product related to this outbreak has been removed from our supply chain and is out of all McDonald’s restaurants,” Cesar Pina, chief supply chain officer for McDonald’s North American operations said, as quoted by CNBC.
“The 900 restaurants that historically received slivered onions from Taylor Farms’ Colorado Springs facility will resume sales of Quarter Pounders without slivered onions,” he added.
In addition, McDonald’s is now asking its beef suppliers to produce a new supply of the fresh beef patties used in its Quarter Pounders.
From its last traded price of $292.61, we’d like to see MCD refill its bearish gap at around $315.
