On December 4th, 2018, Walgreens stock was trading north of $86.30 a share. Yesterday, it closed at $51.43 for a total loss of 40.4% in nine months. Nine months in which the general stock market has been rallying.
Walgreens Boots Alliance is a pharmacy retailer with over 18 500 stores in 11 countries. Walgreens is considered a “defensive” company, because people get sick and need medicine regardless of the economic conditions. Well, losing 40% of the investment in less than a year is not exactly our idea of “defensive”.
However, Walgreens’ business remains solid and at some point the stock is going to stop falling and head north again. Is WBA ready to start recovering? Let’s see if Elliott Wave analysis can help us find out.
The 4-hour chart of Walgreens stock reveals that the decline from over $86 to $49 is impulsive. According to the theory, a three-wave correction in the other direction follows every impulse.
If this count is correct, WBA stock is already searching for a bottom. We can expect a notable recovery to roughly $65 a share for a total gain of nearly 30%. The MACD indicator also supports the positive outlook. It shows a strong bullish divergence between waves 1, 3 and 5.
No trend lasts forever and Walgreens’ downtrend is not going to either.
Did you like this analysis? 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!