Shares of Walgreens Boots Alliance (WBA) look toppy and are likely to struggle at resistance.
The chart of WBA, above, has been "rolling over" for months and traders should consider a more-defensive stance if minor support around $80 gives way. The price of WBA and the On-Balance-Volume (OBV) line peaked in early August, and both have worked irregularly lower since. Rallies into the $90 to $95 area have failed and the slope of the 50-day Simple Moving Average is negative, telling us that mathematically, we are in a down trend. The Moving Average Convergence Divergence (MACD) oscillator is below the zero line.
The $85 level has, at times, acted as support for WBA, but a failed rally attempt earlier this month, and another attempt this past Friday, now suggests that the $85 level will reverse roles to act as resistance. Dips to, and below, $80 have seen some support in late August and earlier this month -- a close below $80 could turn this support to resistance.
This longer-term chart of WBA, above, shows prices below their 40-week moving average, a flat OBV line and a bearish MACD oscillator. With both the daily chart and the weekly chart of WBA suggesting that further declines are possible, longs should protect their positions and take appropriate action on a close below $80. The next chart support is in the $70 to $60 area.
Nov. 30, 2015 | 10:15 AM
CVS Healthcare Could Use a Booster Shot
- The path of least resistance for the stock appears to be lower. A break below $90 could precipitate a deeper decline.
In our last coverage of CVS Healthcare (CVS) on November 11 we saw a weak chart picture and the story hasn't changed.
CVS peaked at the end of July/early August and has been under selling pressure since (see the chart above). There was a death cross in October as the 50-day Simple Moving Average fell below the slower 200-day moving average. In early November, CVS gapped down below both averages. Prices have tried to stabilize in the $90 to $95 area and there is a small bullish divergence between the lower lows in price and a higher low on the momentum study, but the On-Balance-Volume (OBV) line is not showing any accumulation. The path of least resistance appears to be lower.
This longer-term chart of CVS, above, doesn't suggest a turnaround or reversal to the upside. Prices are below a flat 40-week moving average. The OBV line is flat on this timeframe, and there isn't a bullish divergence between the lower lows on the price chart and the momentum study on this time frame. The next trigger point for CVS is a break below the recent low at $90, which could precipitate a deeper decline to the next support level around $80.
Nov. 30, 2015 | 10:15 AM
Small-Caps Poised for Big Gains
The charts point to a year-end run by small-caps.
Professional money managers are always looking for the area of the stock market that will outperform. Will it be large caps or small caps? Value or growth? Right now, the charts point to a year-end run by small-caps.
The iShares Russell 2000 ETF (IWM), chart above, just made a new high for the recent move up, breaking above its early November peak. A three-month tradable base is now in a place that could support a rally back to the June high. The On-Balance-Volume (OBV) line is firming up along with the price action, and the trend following Moving Average Convergence Divergence (MACD) oscillator is bullish and above the zero line. Prices are between the rising 50-day moving average and the flat 200-day MA, but I anticipate a breakout over the 200-day MA soon.
The point-and-figure chart above shows all the intraday swings in IWM. The top of the chart and our price target is $128, and a trade or print at $130 would be a "double top" breakout. On the downside, a trade at $106 would be a new low and would be bearish.
Nov. 30, 2015 | 09:30 AM
Hologic Has Bullish Indicators, But It Won't Double
- HOLX is a technical "hold," with a sell-stop at $36.
A fundamental story in the latest issue of Barron's tells readers why the shares of Hologic (HOLX) could double in five years. The price chart of HOLX is bullish, but not a double, in my opinion. Let's see what the charts suggest.
In this chart of HOLX, above, we can see that prices have stayed above the rising 200-day Simple Moving Average -- a good trend-following signal. Over the past four months, HOLX has traded sideways around a now-flat 50-day moving average. There was a bullish divergence in the September to October period -- between lower lows in price and a higher low in the momentum study. This bullish divergence is constructive, but it has not propelled HOLX to new 52-week highs. We would be more encouraged if the On-Balance-Volume (OBV) line had broken out to new highs, foreshadowing a breakout in price, but that is not the case, here.
This longer-term chart of HOLX, above, is positive, but is not "super compelling." Prices are above the rising 40-week moving average. The OBV line is steady and the Moving Average Convergence Divergence (MACD) oscillator is heading towards a bullish crossover. The bottom line: HOLX is a technical "hold," with a sell-stop at $36. HOLX could breakout to the upside, but it will need a burst of volume to confirm and support the advance. Other stocks we have highlighted in recent weeks are more compelling buys, right now.