Trade of the Day: Walgreens Boots Alliance

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Monday was a milestone day for the Nasdaq Composite, which cracked the 5,000 level for the first time since Bill Clinton was in office. Helping out were stocks large and small, including many that were not even saplings the first time around. Apple Inc. (AAPL), the exchange’s heavyweight, was up a respectable but unspectacular 0.5%, and Priceline Group Inc (PCLN) rose 1%.

But real damage to the ceiling was done by a lot of chip stocks, such as old man Intel Corporation (INTC), up 2.4%; Skyworks Solutions Inc (SWKS), up 3.9% and one that we have traded many times, but unfortunately not this week; and NXP Semiconductors NV (NXPI), up 17.3% on news that it was combining with Freescale Semiconductor Ltd (FSL) to become an industry goliath that will be No. 1 in several key categories, including the silicon in cars, near-field communication and identity cards.

Part of the motivation for the move higher was given by the People’s Bank of China, which cut its key lending rate by 25 basis points, to 5.35%. Jimmy Fallon should send the central bank one of his famous thank you cards.

It certainly wasn’t the U.S. economic data released today, because it was all pretty lame. The Treasury market ignored this super-soft data and plunged, sending the yield on the benchmark 10 year note soaring to 2.08%. Hope you are not planning to close your mortgage today.

Putting it all together, it appears that money was fleeing bonds and entering the stock market, which naturally is something we would support. However, if the economic data stay weak, and corporations continue to feel that that they have to merge to keep growing, the effervescence in evidence will temper.

Today’s recommendation is for a short trade on Walgreens Boots Alliance Inc (WBA).

Trade of the Day: Walgreens Boots Alliance Inc (WBA)

Walgreens is a very fine, wonderful, excellent international chain of drug stores. The drug-store business is very good, but WBA shares have gone ballistic, and it is time to fall back to earth. A little, at least. Not looking for anything super dramatic, but the recent gains looked exhaustive.

Short WBA at $83 limit, good till canceled, for a target of $78. Also, set a stop at $87.15 limit, good till canceled.

Jon Markman operates the investment firm Markman Capital Insights. He also offers a daily trading advisory service, Trader’s Advantage, and CounterPoint Options, a service that helps individual traders make steady, consistent profits with volatility-related instruments.


Article printed from InvestorPlace Media, https://investorplace.com/2015/03/trade-day-walgreens-boots-alliance/.

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