DaytradeTeam Profitzzz
Recaps of DaytradeTeam Trading Systems Performance
Monday, November 28, 2005
McDonald's Setup Makes Me Smile
MCD is setting up for an explosive breakout to the upside, and I want to make sure you get in on it when it happens. I know what you're thinking. McDonald's? The burger joint? Come on Andy--give me something with bytes or bits or clicks like AAPL or GOOG!
Well, the beauty of technical analysis is that you don't have to care anything about what the company actually does. The only thing that matters is the stock trading, and I like what I see on MCD.
The first thing you'll notice on the chart above is the 3 month consolidation pattern that MCD has made between 32 and 34. Typically these types of tight trading channels are the base for a large, extended move in one direction or another. Just look for a break of the consolidation range on above average volume and play the stock in that direction with a 4% trailing stop.
Look for a break (and hold) above 34.25 on volume of more than 9 million shares as your indicator to initiate a bullish position.
The key here is patience. Getting in now at 33.95 or 34 may be tempting because you will already have an extra .25 profit by the time the stock begins its breakout move. Unfortunately, this type of thinking gets a lot of traders in trouble because they are ignoring the power of the 34.00 resistance level that has made this consolidation pattern so appealing in the first place. By simply waiting for a move above 34.25 on good volume, you put the risk/reward ratio in your favor by a huge margin---where if you get in now you actually have a greater chance of the 34.00 resistance level holding and losing on the trade than winning.
If the stock never breaks 34.25 on big volume, we'll just keep on looking for other opportunities in a very tradeable market--including in options trading.
I want to show you exactly how I trade---EVERY DAY. JUST CLICK HERE to learn more about how you can watch me trade and get my stock picks each and every day--LIVE!
Well, the beauty of technical analysis is that you don't have to care anything about what the company actually does. The only thing that matters is the stock trading, and I like what I see on MCD.
The first thing you'll notice on the chart above is the 3 month consolidation pattern that MCD has made between 32 and 34. Typically these types of tight trading channels are the base for a large, extended move in one direction or another. Just look for a break of the consolidation range on above average volume and play the stock in that direction with a 4% trailing stop.
Look for a break (and hold) above 34.25 on volume of more than 9 million shares as your indicator to initiate a bullish position.
The key here is patience. Getting in now at 33.95 or 34 may be tempting because you will already have an extra .25 profit by the time the stock begins its breakout move. Unfortunately, this type of thinking gets a lot of traders in trouble because they are ignoring the power of the 34.00 resistance level that has made this consolidation pattern so appealing in the first place. By simply waiting for a move above 34.25 on good volume, you put the risk/reward ratio in your favor by a huge margin---where if you get in now you actually have a greater chance of the 34.00 resistance level holding and losing on the trade than winning.
If the stock never breaks 34.25 on big volume, we'll just keep on looking for other opportunities in a very tradeable market--including in options trading.
I want to show you exactly how I trade---EVERY DAY. JUST CLICK HERE to learn more about how you can watch me trade and get my stock picks each and every day--LIVE!
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