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Price:MCD has just started its uptrend, and it's already testing the 50MA. Compare that with GOOG's chart at the top of this page, where GOOG only tested the 50MA twice during a 10 months uptrend. Notice the wide separation between 50MA and price, which forces price to come down closer to the 50MA in a hurry. Price is balancing on the 50MA, will it go up or down? Volume: Volume is a little higher than average, but not alarming so. It doesn't seem the market is that concerned with MCD testing the 50MA. Contrast this with GOOG at the top of this page, where the volume skyrocketed. Stochastics: Stochastics is stuck in oversold territory, trying to get out, indicating selling pressure. ADX, +DI and -DI: After a recent streak of +DI dominance, -DI is fighting back with a nice scissor action and a series of higher pivot highs. -DI is not strong enough to challenge the last pivot high of +DI, but there is nice separation between -DI and +DI, making the +DI look a bit weak. ADX is still very strong above 25 and going up, indicating a strong trend. Notice that ADX spent 4 months below the 25 line before this uptrend, a very bullish sign! MACD: MACD is all the way below the zero line, making a deep low, much lower than its previous low. It will be very hard for MACD to make a new high above zero. MACD looks pretty bearish right now. Conclusion: There are many similarities with GOOG's chart at the top of this page. But it's the differences that count. First, volume for MCD is only a little above average, meaning the market sees no danger in MCD testing the 50MA. Second, ADX spent 4 month below the 25 line, meaning a lot of energy for an uptrend was saved up. GOOG's ADX spent 10 months above the 25 line, spending all its energy. This makes it much more likely for GOOG to fail the 50MA test, and for MCD to pass the 50MA test. A long buy of MCD at this point would have a good probability of success. Below is the stock 6 months later. Try to find the December 10, 2009 date where the chart above left off. MCD successfully tested the 50MA, and did so again several more times, ultimately topping out in May 2010 (with a big separation between price and 50MA) for a 15% or so profit. Notice how MCD is in trouble again now, trying to form a double bottom. Perhaps this is the start of another uptrend!  Chart by
www.FreeStockCharts.com
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