McDonald’s stock is holding steady around $298, despite changing consumer habits and rising prices. The company is financially strong, with a market cap over $213 billion and a dividend yield of 2.37%, marking almost 50 years of increasing dividends. Goldman Sachs has recently boosted its rating to “Buy,” citing McDonald’s product innovations and digital strategies to regain market share. The company is rolling out new menu items like snack wraps and the “daily double” burger to attract budget-conscious customers. They are also enhancing their drink offerings based on insights from the CosMc’s concept to encourage more foot traffic and larger purchases. There’s also a change in leadership, with Annemarie Swijtink becoming CEO of McDonald’s Canada, indicating fresh strategic paths. McDonald’s is navigating a tough consumer environment with strong financial strategies, robust branding, and focused innovation. After a recent market correction, the stock price rebounded from a low of $276.80, indicating positive movement. The current share price is within a changing market framework, which may lead to a leading diagonal pattern. If wave (5) exceeds $333.27, this structure will be invalid, requiring a new evaluation of the stock’s pattern and broader effects. For now, attention is on completing the diagonal and preparing for a potential pullback. The recent bounce in the stock from its low is seen as a key buying signal, backed by Goldman Sachs’ upgrade. The new value items and improved beverage options should attract more customers soon, suggesting further upward potential, making short-term call options an appealing choice. The company is focusing on cost-conscious consumers, with initiatives like the upcoming $5 meal deal directly responding to recent shopping habits. A new survey from Revenue Management Solutions indicates that 25% of lower-income Americans are cutting back on fast food due to high prices. This new promotion could bring in more customers and help drive the stock price higher. However, the potential leading diagonal pattern raises a warning that a sharp downturn could follow the current rally. These patterns usually lead to deep pullbacks, erasing a large part of prior gains. Thus, we are considering buying put options to take advantage of a potential drop once the upward trend shows signs of slowing down. Historically, the stock experiences significant corrections after strong performances, like the drop from nearly $300 to $246 in the latter half of 2023. The mixed fundamental and technical indicators suggest increased volatility. This makes strategies that benefit from large price movements, such as a long straddle, a sensible approach for the upcoming weeks. Our bearish outlook depends on the stock staying below the $333.27 mark. A sustained move above that price would invalidate our diagonal pattern and force us to rethink our pullback strategy. We will monitor this level closely as it will be a key trigger for reassessing our position.

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