Walgreen’s Chart Should Scare Investors

WAG has formed a bearish horn -- one of the most feared technical patterns

   

Walgreen’s Chart Should Scare Investors

Walgreen Co. (NYSE:WAG) — This is the largest revenue producer among the U.S. retail drug chains. But ever since it ended its relationship with Express Scripts in 2011, it has been in a decline.

Sales leverage has been running behind other drug chains, and the company will likely experience very low sales growth in the future. Earnings for fiscal year 2012 are estimated at $2.76, down from $2.94 in 2011.

Technically WAG appeared to be consolidating within a rectangle until it broke through its 50-day moving average and support line in May.

The recent rally could take the stock back to its 50-day at $33 where it should be sold since the current pattern is that of a bearish horn — one of the most feared technical patterns.

A penetration through the lower support line at about $29 targets the stock for a fall to $22.

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Article printed from InvestorPlace Media, http://investorplace.com/2012/06/trade-of-the-day-walgreen-co-nyse-wag-2/.

©2014 InvestorPlace Media, LLC

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