Sell the recent rip on Walgreens stock
Dow stock Walgreens Boots Alliance Inc (NYSE:WBA) is a historical underperformer in the second quarter. WBA's technical troubles could come sooner rather than later though, if past is precedent.
Per a study from Schaeffer's Senior Quantitative Analyst Rocky White, Walgreens stock is within one standard deviation of its 120- and 160-day day moving averages. The equity has ran into the 120-day trendline seven times over the past three years, and averaged a one-month loss of 6.4% in 71% of those instances.
The security averaged a 3.5% loss three of the five times it ran into its 160-day moving average. A move of similar magnitude would put Walgreens stock back below its year-to-date breakeven level.
Those looking to take advantage of the potential dip should consider options, as traders are pricing in low volatility expectations at the moment. This is per WBA's Schaeffer' Volatility Index (SVI) of 24% that ranks higher than just 4% of reading from the past 12 months. Plus, the stock ranks high on
Schaeffer's Volatility Scorecard (SVS), with a score of just 71 out of 100. In other words, the security has typically beat said volatility expectations.