Technical Trouble Stacked Up for WBA Stock Ahead of Earnings

The stock pulled up to a bearish technical signal on the charts

by Lillian Currens

Published on Apr 1, 2020 at 1:28 PM
Updated on Apr 1, 2020 at 1:32 PM

Things aren't looking good for pharmacy bigwig and Dow member Walgreens Boots Alliance Inc (NASDAQ:WBA). The shares of WBA are down 3.4% at $44.20, bringing their year-to-date deficit to 24.6%, just ahead of the company's fiscal second-quarter earnings report, due out before the open tomorrow. Furthermore, tomorrow's earnings aren't the only thing that could move WBA in the near future -- several historically bearish signals are rearing their heads as potential warnings signs for investors to put the breaks on WBA. 

To start, the blue chip just showed up on Schaeffer's Senior Quantitative Analyst Rocky White's list of the 25 worst performing stocks in the second quarter. According to White's data, WBA has only ended the second-quarter in the black twice in the last 10 years and averaged a -6.5% return. From its current perch, a similar move would put WBA at $41.33, which is just north of its mid-March seven-year lows. 

Walgreens just made its way into another study from White, as well, as the equity came within one standard deviation of its 40-day moving average following a lengthy period below the trendline. WBA has seen four similar signals in the past three years, leaving the equity lower one month later 33% of the time, averaging a one-month drop of 6.3%. 

WBA Chart April 1

The stock's last eight post-earnings moves don't exactly bode well for WBA either. The stock fell lower during five of these next-day trading sessions, including a 12.8% next-day dip this time last year. This time around, the options pits are pricing in a 12.4% swing for WBA, which is more than double the 5.3% next-day move WBA has averaged over the past two years, regardless of direction. 


A Schaeffer's exclusive

6 Sectors for Summer

Access your FREE insider report before it's too late!



NEW! Explore Schaeffer’s Partners' deals and get connected to top online brokerages with deals tailored exclusively for our readers.  Get answers to your questions regarding transfer fees, commission rates, programs and available discounts related to online trading services.

MORE | MARKETstories

Huge New Legal Marijuana Market Has Shortage Crisis
250 million Europeans have access to medical marijuana. There's already a shortage....
J M Smucker Stock Jammed by Ugly Sales Outlook
J M Smucker's fourth-quarter profits and revenue were better than Wall Street expected
NIO Rises on Record-Breaking Deliveries
Nio stock hit a record high in vehicle deliveries for May
The Next Big Player in U.S. MJ Boom
Most pure-play marijuana stocks in the U.S. trade on the Over-the-Counter stock exchange.