close icon

Walgreens: Did the Market Foresee that KKR Offer?

Anyone who’s been in Elliott Wave analysis long enough has noticed how often some external factor “makes the price move” in the direction the analysis had identified much earlier. We’ve seen it happening in crypto, we’ve seen in happening in stock indices. Now, it happened with Walgreens stock.

Walgreens jumped on November 5th after CNBC reported the company was exploring a go-private deal. The rumor turned out to be true on November 11th, when the drug-store chain was officially approached by private equity firm KKR.

Walgreens was down to a multi-year low of $49.03 in late-August, but spiked to $64.50 after the rumor first came out. What is more interesting is the fact that there was a bullish Elliott Wave setup in place two months earlier. Take a look at it below.

Walgreens Stock to Regain its Footing

This chart was published on September 5th in an article titled “Walgreens Stock Can Add Roughly 30%.” It revealed that the decline between $86 and $49 was a complete five-wave impulse pattern. To every Elliott Wave analyst this meant that a move in the opposite direction can be expected.

Elliott Wave Analysis ahead of the Walgreens Buyout Rumor

The anticipated rally had to be of respectable size in relation to the preceding impulse. So, we thought “we can expect a notable recovery to roughly $65 a share for a total gain of nearly 30%.” In addition, there was a strong bullish MACD divergence supporting the positive outlook.

The next chart shows Walgreens stock as it is today, over two months after the September 5th analysis.

Walgreens completes Elliott Wave cycle as KKR prepares a go-private offer

Walgreens stock was at $51.44 when we first spotted the complete five-wave pattern. Precisely two months later, it touched $64.50 for a 25.4% gain. Now, two possibilities exist.

One, KKR takes Walgreens private at a price not much higher than the current market price. And two, the companies fail to reach a deal and Walgreens remains a public entity. That second possibility is probably keeping arbitrageurs up at night.

If a deal is not reached, WBA stock will be at the mercy of pure market forces again. The problem is that with a complete bearish 5-3 wave cycle already in place, another selloff is going to be very likely. In other words, if KKR fails to pull off the largest leveraged buyout in history, Walgreens stock may revisit the sub-$50 area once more…

Similar Elliott Wave setups occur in the Forex, crypto and commodity markets, as well. Our Elliott Wave Video Course can teach you how to uncover them yourself!



Stay informed with our newsletter

Latest Elliott Wave analysis on different topics delivered to you weekly.

Privacy policy
You may also like:

JNJ Stock Pattern Suggests Uptrend is Almost Over

Despite its top quality, Johnson & Johnson didn’t fully participate in the post-2009 bull market. JNJ stock is up 224% since the bottom of the Financial Crisis, while the Dow Jones added 354% in the same period. However, JNJ stock climbed to a new all-time high last week in a breakout that makes the bulls…

Read More »

Steel Dynamics Completes Bearish Wave Setup

Steel Dynamics stock climbed 40% throughout the second half of 2019. The share price rose from $25 to almost $36, but that’s after a decline from $52.10 in May 2018. In other words, despite the recent recovery STLD is still down 36.7% in the past 19 months. Can the steel manufacturer stock’s revival continue or…

Read More »

Spirit AeroSystems Not an Elliott Wave Bargain Yet

In the ten years between November 2008 and January 2018, Spirit AeroSystems stock surged 1373%. The rally from $7.14 to $105.20 made anyone who happened to catch even a part of it quite happy. The following two years, on the other hand, not so much. Spirit AeroSystems is down by a third in the last…

Read More »

Shopify Investors Probably Believe in Unicorns, Too

Shopify is a cloud-based commerce platform founded in 2004 and headquartered in Canada. Its market cap is approaching $50 billion, even though the company is not yet profitable. We know from history that profits determine a business’ success in the long-term. In the short run, however, investors’ emotions is what makes a stock rise or…

Read More »

EssilorLuxottica To Lose a Third in Elliott Wave Drop

EssilorLuxottica came into existence in October 2018 after the French Essilor acquired the Italian Luxottica in a $24 billion deal. The merger resulted in the world’s largest eyewear company with a market cap of roughly 60 billion euro. Listed on the Euronext Paris stock exchange, EssilorLuxottica is part of the French CAC 40 and the…

Read More »

Linamar ‘s 2020 is Shaping up to be a Great Year

Founded in 1966, Linamar Corp. is the second-largest automobile parts manufacturer in Canada. The stock is listed in Toronto and had an exceptionally strong run between 2009 and 2015. In a little over six years, the share price rose from as low as C$2 to as high as C$89.42. That’s 88.4% compounded annually. Unfortunately for…

Read More »

Time for BMW Stock Bulls to Hit the Brakes Again?

It’s been almost five years since BMW stock hit an all-time high of 123.75 euro a share. Five years for investors to wonder why they didn’t sell earlier. As of this writing, the stock trades near 75.40, down 39% from the March 2015 record. On the bright side, the stock trades near 75.40, up 29.9%…

Read More »

More analyses