Bounce in MCD

MCD is a DOW-30 Bellwhether stock, it's fallen apart recently making it a short trade idea. An interesting fact for some of the newer members, in a BEAR market, there tend to be more up days then down days, it's just the down days are bigger percentage moves. What this should tell you is the simple fact that nothing, whether bear market or bull market goes straight up or down, there are corrections.

MCD which has been performing well on the downside looks like it's about to see an upside correction/bounce. For Swing traders, this is where you may want to take profits, for trend traders, this is just part of the game and you can't get caught up pyschologically in the fact that there will be corrections, especially when you have a day like MCD recently had on the downside.

Here's the charts leading me to believe a correction is coming. ***Also note, that if you are looking to add to the position, a correction is a great time to add.

Daily chart of MCD-note the big move down yesterday on increasing volume. Today there was no follow through downside, at least to this point. When we see heavy volume on a downside move with no follow through, the chances are it's a micro-version of capitulation and a bounce/correction is nearby.

3C 10-minute shows some accumulation yesterday and today, this is generally market makers and others that have access to the order flow and know that there's not a lot of short orders coming in or they see shorts have taken profits. This is part f the reason I never place any kind of order that market makers can see until I'm ready to actually execute the trade.

I'd take a wild guess that MCD will probably bounce near the $76.50-$77 level on an attempt to test resistance and fill some gaps. If the gap is not filled, it's very bearish as it would constitute a breakaway gap down. In either case, watch for some upside in MCD over the coming days and act accordingly for your trading style.