Walgreen’s and CVS are on the Same Corner – How to Choose
- Posted by Greg Harmon
- on February 17th, 2011
It’s funny how you end up with two banks next to each other, 3 gas stations at the same intersection and a Walgreen’s always right next to every CVS. So when you are out to get your throat lozenges how do you choose? The one on the same side of the road as you? The first one you reach? I choose the one with the better chart.
Walgreen, Ticker: WAG
Walgreen’s, ticker: WAG, is in a long rising rising wedge since July. As this upward move started the Relative Strength Index (RSI) moved into bullish territory and has remained bullish. Currently it is flat though. The Moving Average Convergence Divergence (MACD) indicator is diverging as it becomes more negative. The price is flagging at the mid line of the Bollinger bands after a move higher. The Simple Moving Averages (SMA’s) are all rising. This is a mostly bullish story. If it can break the flag higher above 42.70 then it can start the next leg higher towards a 45.20 target on a measured move. But the price action may have it consolidate at the wedge support or the 50 day SMA first. If entering this stock now keep a stop under the flag at 41.85.
CVS Caremark, Ticker: CVS
Whoa, there are a lot of lines on this chart. The blue lines are the Fibonacci retracement levels from the high of 43.05 in June 2008 to the low of 22.64 in November the same year. Notice how the price of CVS has settled from oscillating between the 76.4%/23.6% retracement levels to a smaller range now between the 61.8%/38.1% retracement levels. Both of these ranges have the mid point of 50% in common and there has been some noise at that level, as noted with the red/green support /resistance lines. Recently the RSI has fallen but is stable, just above the technically oversold line and the MACD is improving. The price is currently sitting on the 100 day SMA and if it holds this level then it can attempt to move through the channel around the 50% retracement and up to 35.25. If the 100 day SMA does not hold and the price falls below 32.30 then it is a short trip down to 30.44.
So which store do I turn into? The better of the two charts goes to WAG. The major difference being that the trend with WAG is up, which is aligned with the broad market. Which did you choose? By the way I am sure many of you thought you would just stay home and use drugstore.com. Not a bad choice.
Drugstore.com, Ticker: DSCM
After rising from support at 1.83 it now has the backing of the RSI piercing through 50 with a good slope and a MACD that has turned positive and is increasing. Above 2.05 it can head higher until resistance at the 2.13 area and then the 200 day SMA at 2.29.
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The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.blog comments powered by Disqus
Gregory W. Harmon CMT, CFA, has traded in the Securities markets since 1986. He has held senior positions including Head of Global Trading, Head of Product Development, Head of Strategy and Director of Equity. (More)
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