A confluence of rising wages and food costs have hammered shares of fast food stocks this month. And now, a widely followed technician says the biggest one of all could soon come under a lot of pressure: McDonald's.
"What we know is that McDonald's, even as it has ascended for the better part of a year and a half, was never able to make relative highs to the market," said Carter Worth, head of technical analysis at Cornerstone Macro.
Shares of McDonald's have rallied nearly 32 percent in the past two years, but have recently broken below their upper trend line around the $165 level.
According to Worth's analysis, while the stock has traditionally been able to recover after testing the upward resistance, its recent break lower could be signaling more bearish momentum.
"This is perceptively a pretty massive head-and-shoulders top for McDonald's," Worth cautioned Friday on CNBC's "Options Action." "The bet would be that we're headed lower, not higher."
The problems gripping McDonald's are also impacting its rivals.
"What we know is that the relative performance [of restaurant stocks] peaked in 2015," Worth said, "[but their] relative performance to equities as an asset class has been nothing short of disastrous."
McDonald's, the largest name in the group, has surged more than 13,000 percent since going public in 1965. However, Worth warns that the rally by the fast food giant is beginning to lose steam and there "could be more risk to go."
Shares of McDonald's have fallen more than 6 percent year to date and are down nearly 10 percent from their all-time high of $178.70.
McDonald's closed slightly higher Monday at $161.48.
