During the fast-paced and popular "Lightning Round" segment of Mad Money Thursday evening, one caller quizzed Jim Cramer about Walgreens Boots Alliance (WBA) : "The model has changed and Amazon.com (AMZN) is the way most people want to shop."
Let's check out the charts of WBA.
In this daily bar chart of WBA, below, we can see that prices made a spike high in late January and since then prices have been correcting lower. WBA is now testing the rising 50-day moving average line. The daily On-Balance-Volume (OBV) line shows weakness the past four weeks and that tells us that sellers of WBA have been more aggressive.
The Moving Average Convergence Divergence (MACD) oscillator is pointed down and close to crossing below the zero line for an outright sell signal.
In this weekly bar chart of WBA, below, we can see that prices are in a position to pullback or correct. The 40-week moving average line is still positive but the trading volume has diminished the past three months - that is not the pattern of a strong stock.
The weekly OBV line shows the start of weakness in February and the MACD oscillator has narrowed for a couple of weeks now telling us that the trend strength is fading.
In this daily Point and Figure chart of WBA, below, we can see a downside price target in the $44-$43 area.
In this weekly Point and Figure chart of WBA, below, we can see that the $43 level is a price objective. There appears to be decent support below $43 but we cannot rule out a retest of the March 2020 lows.
Bottom line strategy: In our update of January 27 we wrote that "East meets West. The Japanese candlestick pattern today shows that traders have rejected the highs today while the Point and Figure chart shows a $61 price target. Maybe WBA has rallied too much ahead of earnings. A correction seems likely." Indeed, prices have been correcting. More weakness lies ahead.
(Amazon is a holding in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells AMZN? Learn more now.)
