Shares of McDonalds are off over 3% today. More downside ahead?

News out of Wendy’s: https://www.benzinga.com/news/19/09/14405641/wendys-falls-after-revising-2019-guidance?utm_campaign=partner_feed&utm_source=marketwatch.com&utm_medium=web_click&utm_content=ticker_page&mod=mw_quote_news , is dragging down MCD in today’s early going. For its part WEN is down over 12%, quite a damaging reversal after printing new 2019 highs on Friday. CMG is also struggling. The stock is off over 5% after hitting a new all time high during Monday’s trade.

MCD began today’s session with a gap lower open that dropped the stock to new September lows. The narrow consolidation pattern that began shortly after the July earnings report appears to be giving way to a healthy pullback. Considering MCD had reached extremely overbought MACD levels, on both weekly and monthly charts, this next phase should not be a surprise. The bull channel that has been in place since the February lows, which carried the stock 28% higher, has also given way.

We expect more downside as today’s breakdown plays out. Initial support is near the $203.00 to $201.00 area. This key zone includes the 1/3 retracement level of the 2019 range near the upper band and the May high near the lower band. We are long MCD in some managed accounts. We are looking to add on further weakness.