Dow Jones Industrial Average laggard Walgreens Boots Alliance, Inc. (WBA) reports earnings on Thursday, July 9, with Wall Street analysts expecting earnings per share (EPS) of $1.24 on in fiscal third quarter 2020 revenue of $34.25 billion. The stock rallied about 15% in two weeks after better-than-expected second quarter results in April and turned tail, hitting a seven-year low in May. Unfortunately for long-suffering shareholders, price action has made little progress off that depressed level in the past seven weeks, raising the odds for even lower lows.

The stock took off in a speculative rally in the fourth quarter of 2019, underpinned by reports of a leveraged buyout with an unnamed private equity firm. Rumors fell through after analysts looked at the company's enormous debt load, which would require a staggering $12 billion in additional equity. The rally turned on a dime at a seven-month high, and there has been little to love about the stock since that time beyond the hefty 4.36% dividend yield.

Walgreens stock got some love in the first quarter's flight to safety, but the risk-on tape since that time hasn't favored the Dow's big dividend payers. Walgreens has done its part in the pandemic, setting up space in parking lots for drive-through testing, but those actions probably have not benefited the company's bottom line. There has also been little Wall Street news to report in the second quarter, with just a single upgrade highlighting broad-based apathy.

Walgreens Long-Term Chart (1987 – 2020)

Long-term chart showing the share price performance of Walgreens Boots Alliance, Inc. (WBA)
TradingView.com

The stock entered a powerful uptrend after the 1987 crash, posting impressive gains while splitting four times into the November 2000 top at $45.75. A two-legged correction found support in the mid-$20s in the first quarter of 2003, giving way to a recovery wave that completed a round trip into the prior high in 2005. The subsequent breakout failed to attract buying interest, yielding volatile two-sided action on top of new support, followed by a 2007 breakdown.

The decline ended at a 10-year low near $21 in October 2008, while the subsequent bounce stalled about six points under the 2006 high in 2011. The stock completed the round trip and broke out in 2013, generating a strong but short-lived advance that posted an all-time high at $94.10 in August 2015. It then eased into a shallow trading range, breaking support in 2017 and entering a major downtrend that has carved a series of lower highs and lower lows into the third quarter of 2020.

The first quarter selloff failed the 2013 breakout just above $50, establishing new resistance at that level. However, continued downside into May reversed at the .786 Fibonacci retracement of the 2008 into 2015 uptrend, marking a high-odds turning point for long-term downtrends. The monthly stochastic oscillator crossed into a buy cycle at the same time, with both technical elements telling market players to watch for the signs of a new uptrend.

Walgreens Short-Term Chart (2017 – 2019)

Short-term chart showing the share price performance of Walgreens Boots Alliance, Inc. (WBA)
TradingView.com

The on-balance volume (OBV) accumulation-distribution indicator hit an all-time high during the 2019 uptick and fell to an 11-month low in the first quarter. Modest buying pressure since that time looks like bottom fishing, but price action hasn't budged, stuck at the declining 50-day exponential moving average (EMA). Meanwhile, the 200-day EMA has dropped through the blue line at $51, reinforcing resistance at the .618 retracement level. In turn, this placement warns traders that it will take a buying spike into the mid-$50s to brighten the dreary long-term technical outlook.

The Bottom Line

Walgreen Boots Alliance stock heads into this week's earnings report plagued by high levels of Wall Street and investor skepticism following a five-year downtrend that is still in force, despite exceptionally strong second quarter action in broad benchmarks.

Disclosure: The author holds no positions in the aforementioned securities at the time of publication.