Walgreens stock had been declining for over five years between 2015 and 2020. One of the largest pharmaceutical retailers in the world reached an all-time high of $97.30 in August 2015. In late-October 2020, it fell to $33.36, losing almost 66% from the record.
It must have been difficult for Walgreens investors to keep a long-term perspective during those five years. Even the fact that KKR apparently thought WBA was worth $70B didn’t help much.
The past few months, on the other hand, are telling a different story. The company has a new CEO and proved to be a valuable partner in the fight against COVID-19. The market quickly revalued the stock to as high as $56.12 earlier this month. Can the bulls trust the recovery this time around, though?
The chart above reveals that the rally since the start of November 2020 has a five-wave structure. It is labeled 1-2-3-4-5 and forms a textbook impulse pattern. The five sub-waves of wave 3 are also visible and marked i-ii-iii-iv-v. According to the Elliott Wave theory, impulses point in the direction of the larger trend.
That’s good news for bruised up Walgreens shareholders. It means that once the corresponding three-wave correction in wave (2/B) is over, they can expect more strength in wave (3/C). A drop to roughly $45 makes sense first, but as long as $33.36 holds, the bulls remain in charge with targets above $60.
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!