Walgreen’s Chart Should Scare Investors

by Sam Collins | June 12, 2012 1:55 am

Walgreen Co. (NYSE:WAG[1]) — 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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Source URL: http://investorplace.com/2012/06/trade-of-the-day-walgreen-co-nyse-wag-2/
Short URL: http://investorplace.com/?p=181444

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