The worst-performing Dow stock this year might be on the road to recovery.
Walgreens shares have fallen nearly 20% this year, and are sitting close to 40% off their 52-week high hit last December. But as the stock finds itself in its fourth straight year of declines, Carter Worth, technician at Cornerstone Macro, said a rebound might be afoot.
"Not only is it a 50% sell-off [since the 2015 high], it's right down to support," Worth said Friday on CNBC's "Options Action."
"It hit that line quite nicely, finding a level where principal support comes into play, and the whole thesis here is: Having sold off 50% down to a level where rebound potential is high, you play for a rebound."
So why is this level such an important indicator for a potential bounce? Worth points to the basing action in the stock over the last three months. Since plunging in early April after reporting fiscal second-quarter earnings, the shares have traded in a relatively tight range of just about $49-$55, and have been trending upward since the end of May.
"We've just now broken above the downtrend line," noted Worth, "We closed at $55.19 [on Friday] and I think ultimately, we're going to get close to filling this gap.
"This line here is at $59, so 7-8%, plus or minus, is what I'm looking for, and I think this basing, this divergence with the and the fact that it was a 50% sell-off down to support is the opportunity."
Walgreens was up slightly in Monday's session.