McDonald's Corporation (NYSE:MCD) has one of the most beautiful technical chart patterns you will ever see. It is a bearish pattern that signals a potential decline of 15% called a head and shoulder. Big money is well aware of this chart pattern setup, which is why as the stock market hits new all-time highs, McDonald's stock continues to struggle. In other words, they are selling into the average investor buying.
This pattern is easy see and even easier to understand when it triggers. Let me explain. The 15% decline is a calculated target that will only begin when the neck line breaks on the head and shoulder pattern. That is the light blue upsloping trend line connecting recent lows. When price violates that line, the head and shoulder pattern triggers with a decline to at least $103.00 and potentially $100.00. Again, big money is well aware and distributing shares to average investors. This is clearly seen in the price action. You have been warned. I am sitting on the sidelines until the neck line is broken, then buying puts.