Stock of the day: McDonald's
30 January 2023
Earning season accelerates and on Tuesday, our today’s hero – McDonald’s will present its earnings for the fourth quarter of the previous year. The consensus on the EPS is 2.45 and the revenue supposes to be 5.71B according to estimates.
McDonald’s awaits this data with a very handsome bullish setup, which most probably, could have been easily triggered by a good earnings report. This setup is a wedge in an uptrend. Wedge (red lines) is a trend continuation pattern and represents the most recent bearish correction that started at the beginning of November. In theory, the wedge should end with a breakout to the upside, which in the case of the McDonald’s would also mean new yearly highs.
Chances for a bullish scenario are pretty high and this is our base scenario. On the other hand, a weaker earnings report can extend the bearish correction a bit more. In that case, the key support is the 38,2% Fibonacci and as long as we are above, the sentiment is positive but a breakout to the downside would bring us a proper signal to sell.