Fastenal Company, together with its subsidiaries, engages in the wholesale distribution of industrial and construction supplies in the United States, Canada, and internationally. It offers fasteners, and other industrial and construction supplies primarily under the Fastenal name.
Take a look at the 1-year chart of Fastenal (NASDAQ: FAST) with the added notations:
FAST has bounced on top of its $42 support (green) a few of times during the past couple of months. Now that the stock appears to have started to roll back down towards that support again, traders should be able to expect some sort of bounce. However, if the $42 support level breaks, lower prices should follow.
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The Tale of the Tape: FAST has a key area of support at $42. A trader could enter a long position at $42 with a stop placed under the level. If the stock were to break below the support, a short position could be entered instead.
Before making any trading decision, decide which side of the trade you believe gives you the highest probability of success. Do you prefer the short side of the market, long side, or do you want to be in the market at all? If you haven’t thought about it, review the overall indices themselves. For example, take a look at the S&P 500. Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.
No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade. Capital preservation is always key!
Christian Tharp, CMT
Follow me on Twitter: @cmtstockcoach