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Death crosses and golden arches: Is $230 or $300 next for McDonald’s stock?

Death crosses and golden arches: Is $230 or $300 next for McDonald’s stock?

McDonald’s (NYSE: MCD) has been a strange stock in recent months in terms of its performance. 

Perhaps the most glaring element contributing to the strangeness has been McDonald’s stockss apparent resistance to the global boycott initiated when the local franchise announced in October it would be delivering free meals to the IDF through the duration of the conflicts.

In fact, despite the organization, early October proved to be the bottom of McDonald’s previous decline and MCD shares are up 5.69% in the six months since.

More recently, McDonald’s was forced to buy its Israeli franchise, and MCD reentered a significant decline in 2024, though it is still to erase all of the 6-month gains.

The fast food chain’s stock has, however, also been strange from a technical analysis (TA) standpoint, as the last time it formed a death cross – a strong bearish signal – it actually bottomed and ended its Q3 2023 decline.

On April 17, as it forms a death cross once more, MCD’s faith remains uncertain both due to its historic and recent stock market performance.

October and April MCD stock death crosses. Source: Barchart

What’s next for McDonald’s stock

With the shares of McDonald’s being on a rather decisive downtrend for the better part of 2024, the fact they formed a death cross – a chart pattern that typically appears when the 50-day moving average crosses below the 200-day moving average – opened the possibility the stock might crash toward its lowest support level just above $230.

On the other hand, the death cross formed in October – and the fact it signaled recovery and not a collapse – render the otherwise strong bear signal uncertain and create a chance for McDonald’s stock to restart its rally if for no other reason than if investors are emboldened by past performance and decline MCD already underwent in 2024.

The reacquisition of the Israeli franchise might also bolster the bull case provided it is backed by the ending of the free meal program, given that McDonald’s itself claims it supports neither party to the conflict and that any reports to the contrary are incorrect.

Finally, however, a further decline is comparatively more likely given the company’s next earnings report is scheduled for April 30 and will cover the trimester during which most of the damage from the boycott was done.

This fact makes the likelihood of McDonald’s failing to meet analysts’ forecasts fairly likely and nearly guarantees significant anxiety among investors and traders in the lead up.

McDonald’s stock price chart

Whether the death cross and the earnings report bring recovery or collapse to McDonald’s, its recent performance has been decidedly checkered. 

Indeed, while MCD shares are overall 5.69% up in the last 6 months, the stock is in the red both year-to-date (YTD) – 10.64% – and in the last 52 weeks – 8.76%.

MCD stock 52-week price chart. Source: Finbold

The more recent performance, as could be inferred from the formation of the death cross, has been no stronger. The last 30 days saw a 4.72% drop, and in the latest full week of trading, MCD fell 0.05%. 

McDonald’s price today stands at $265.43 after closing 0.30% in the red on Tuesday, April 16.

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