Skip to main content

NEW YORK (TheStreet) -- Walgreen (WAG) reports quarterly earnings before the opening bell on Tuesday. Despite matching or missing earnings estimates for six consecutive quarters, the stock is poised to set a new all-time high given a better than expected report.

Meanwhile CVS Health (CVS) - Get Free Report continues to set all-time intraday highs almost daily, including Friday's high at $96.73. CVS beat earnings estimates two quarters in a row since quitting tobacco sales and expanding its health care presence with Minute Clinics. This stock may be benefiting from money managers who practice "socially responsible investing." CVS has a year-to-date gain of 34%, significantly beating Walgreen's gain of 27%.

Analysts expect Walgreen to report earnings of 74 cents a share. This earnings reports comes just as the company is completing its merger with German pharmacy giant Alliance Boots. On Friday, the company announced that it was moving from the NYSE to the Nasdaq, with the ticker symbol "WBA." Investors also face an analyst downgrade to neutral from buy, but with a price target raised to $77 from $72 -- in the stock's current trading range.

Here's the daily chart for Walgreen.

Image placeholder title

Courtesy of MetaStock Xenith

The daily chart for Walgreen ($73.23) shows that the stock has had a volatile ride in 2014. The stock began the year above its 200-day simple moving average (green line) and traded to a 2014 low at $55.27 on Feb. 5. This began a momentum run-up of 38% to an all-time intraday high at $76.39 on June 19.

On Aug. 6, the stock plunged after announcing that it would remain U.S. based after completing its acquisition of Alliance Boots. Investors had expected Walgreen to relocate to Europe to reduce its tax bill.

The stock traded as high as its 50-day simple moving average (blue line) at $72.22 on Aug. 5, then as low as $57.75 on Aug. 6, a one-day plunge of 20%. Note the price gap below the 200-day SMA, then at $65.11. Shares of Walgreen stayed below its 200-day SMA until Nov. 6, at $66.12, when the stock regained momentum. It then traded as high as $75.14 on Dec. 12, challenging the all-time high just before Tuesday's earnings report.

Here's the weekly chart for Walgreen.

Image placeholder title

Courtesy of MetaStock Xenith

The weekly chart for Walgreen shows that the stock has been above its 200-week simple moving average (green line) since December 2012, when this average was $34.45. Investors should be aware that the stock is 49% above its March 2007 high at $49.10, before the crash of 2008. The stock traded as low as $21.28 in October 2008.

The weekly chart is positive but overbought, with its key weekly moving average at $68.98, and its 200-week simple moving average now at $47.23. The momentum reading in red at the bottom of the graph is at 88.27, well above the overbought threshold at 80.00.

Here's how to trade Walgreen.

Investors looking to buy Walgreen ($73.23) on weakness should enter a "good 'til canceled" limit order to buy weakness to a key technical level at $48.95.

Investors looking to book profits on Walgreen enter a "good 'til canceled" limit order to sell at a key technical level at $74.91, which is below the all-time high. Investors should also consider a sell-stop below the key weekly moving average at $68.98, knowing that this average will be rising each week.

Follow @Suttmeier

TheStreet Ratings team rates CVS HEALTH CORP as a Buy with a ratings score of A+. TheStreet Ratings Team has this to say about their recommendation:

"We rate CVS HEALTH CORP (CVS) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, largely solid financial position with reasonable debt levels by most measures and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

You can view the full analysis from the report here: CVS Ratings Report

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.