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  • luckyone581 luckyone581 Sep 24, 2012 9:10 AM Flag

    WAG Chart Evaluation & Buy Mention

    WAG Friday Closing Price - 35.11

    During the past 5 years WAG has traded about 70% of the time between $30 and $40 with one exception when the stock dropped down to $21 and one exception when the stock rallied to $45. The stock got down to 28.53 in June and since then has been on a strong rally that reached a high at the end of July at 36.85. Nonetheless, the stock has been trading in a narrow trading range for the past 7 week between 36.85 and a low of 34.63 seen 3 weeks ago. The narrow trading range seen is considered a flag in a bullish flag formation with the flagpole being the rally from 28.53 to 36.85. If the top of the flag at 36.85 is broken, the flag would give an objective of 40.95.

    WAG often moves in opposite direction to the indexes as it is a company that thrives when things are bad and suffers when things are good. As such, a correction in the indexes would likely help the stock go higher. This situation is not always dependable as the stock will move on its own fundamentals more often than not, but at this time with the action seen in the stock recently, it seems likely that no matter what the market does that the stock will move higher.

    Support in WAG has to be the recent low at 34.63. Nonetheless, the stock gapped up on July 19th from 31.21 to 34.00 and subsequently dropped into the gap area with a fall down to 33.60 a few days later. As such, both the 34.63 low and the 33.60 low have to be considered important supports. The 33.60 low takes on additional meaning and strength because the 200-day MA is currently at 33.55. Simply stated, things would have to turn quite negative in order for that support to break.

    To the upside, minor resistance is found at 36.04 and decent resistance at 36.85 and then nothing until the 40.40-40.70 level is reached.

    WAG closed on the lows of the day on Friday and right at the 50-day MA, currently at 35.15. Further downside is expected to be seen on Monday but the probabilities favor the stock not closing below the 50-day MA. The 34.63 level of support will be important this week but if not broken it is likely the stock will start rallying immediately thereafter. By the same token, if 34.63 is broken, the stock is likely to get down to at least the 34.00 level and then rally.

    Purchases of WAG between 34.63 and 35.11 and using a stop loss at 33.50 and having an objective of at least 40.40 will offer a 4-1 risk/reward ratio.

    My rating on the trade is a 3.75 (on a scale of 1-5 with 5 being the highest).

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    • This would be a good outlook if Walgreens Distribution center (1 of 12) did not have a IOS
      from the DEA.

      Looking at the results from CAH administrative hearing by the DEA on Drug Diversion in Florida, with CAH having the number 2 guy from the DEA on their payroll, revenue into and beyond the 1st Q will take another hit beside the Esrx impasse.

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      Around 3 months later in the case with CAH the selling price declined,

      Would you care to respond to this outlook???