Walgreens Gets Booted Down a Notch: How We’d Play It

Let’s check out the charts again.  

In the updated daily bar chart of WBA, below, we can see that the shares declined in January and February and made a short-lived rebound in March before sinking to test the December and February lows. WBA is trading below the declining 50-day and declining 200-day moving average line.

The daily On-Balance-Volume (OBV) line has been weak the past 12 months telling us that sellers of WBA have been more aggressive than buyers. The Moving Average Convergence Divergence (MACD) oscillator is bearish and is crossing to the downside from below the zero line. 

In the weekly Japanese candlestick of WBA, below, we can see that the shares are poised to break to the downside from a lengthy sideways consolidation pattern from $45 to $55. WBA is trading below the declining 40-week moving average line.

The weekly OBV line has turned down over the past three months. The MACD oscillator has slipped below the zero line for an outright sell signal. 

 

In this daily Point and Figure chart of WBA, below, we can see a downside price target of $40. 

In this weekly Point and Figure chart of WBA, below, we can see a potential downside price target in the $38 area. I would not rule out a decline to the low $30s.

 

Bottom-line strategy: The fundamentals and the charts are on the same page — bearish. Avoid the long side of WBA.