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Wendy's Charts Could Hint At McDonald's Future, Technician Says

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Wendy's Charts Could Hint At McDonald's Future, Technician Says

Investors who want to own a fast food stock need to have "the stomach" to continue tolerating major volatility going forward, MKM Partners chief market technician JC O'Hara said on CNBC's "Trading Nation."

'Positive Read-Through' From Wendy's 

One of the more notable fast food restaurant stocks to go through a period of volatility is Wendys Co (NASDAQ: WEN), and it could serve as a "good example" of what Mcdonald's Corp (NYSE: MCD) investors might expect to see, O'Hara said. Wendy's stock fell more than 70% from its February peak to its March lows.

Once the news cycle shifted to become more positive, Wendy's stock underwent a "meaningful" recovery and gained 130% from its lows, he said. 

If Wendy's stock can hold on to recent momentum, it could be seen as a "positive read-through for McDonald's," O'Hara said. 

A 'Good Sign' For McDonald's 

McDonald's sales announcement that same-store sales fell 22% in March due to the coronavirus didn't hurt the stock, Tocqueville Asset Management portfolio manager John Petrides also said on "Trading Nation."

This could be seen as a "good sign" for the near-term, but investors should expect similar concerning announcements to follow, he said. 

"With earning season ramping up next week, I do think this is what we're going to see from a lot of companies, and that is, you know, massive downward revision, downward numbers on top-line growth, and companies husbanding cash," Petrides said.

Wendy's shares were up 6.43% at $17.07 at the time of publication, while McDonald's shares were 3.39% higher at $183.50. 

Related Links:

McDonald's Withdraws Guidance After Significant Sales Decline In March

Starbucks Shares Fall As Q2 Earnings Halve Amid Pandemic

Photo by Bryan Hong via Wikimedia

 

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