Fastenal Company (NASDAQ: FAST)

Fastenal Company, together with its subsidiaries, operates as a wholesaler and retailer of industrial and construction supplies in the United States and internationally. It offers fastener product line under two categories, which include threaded fasteners, such as bolts, nuts, screws, studs, and related washers that are used in manufactured products and building projects, as well as in the maintenance and repair of machines and structures; and miscellaneous supplies and hardware comprising various pins and machinery keys, concrete anchors, metal framing systems, wire ropes, strut products, rivets, and related accessories. The company serves the construction market, which consists of general, electrical, plumbing, sheet metal, and road contractors; and manufacturing market, including original equipment manufacturers, and maintenance and repair operations, as well as other users, such as farmers, truckers, railroads, mining companies, federal, state and local governmental entities, schools, and retail trades.

To review Fastenal’s stock, please take a look at the 1-year chart of FAST (Fastenal Company) below with my added notations:

1-year chart of FAST (Fastenal Company)

After trending lower since April, FAST has settled into a small Rectangle pattern over the last couple of months. A Rectangle pattern forms when a stock gets stuck bouncing between a horizontal support and resistance. For FAST, the Rectangle pattern has formed a $45 resistance (red) and a $42 support (blue). The $45 resistance also extends back into May.

The Tale of the Tape: FAST has formed a small Rectangle pattern. The possible long positions on FAST would be either on a pullback to $42, or on a break above $45. The ideal short opportunity would be on a break below $42, but a short could also be placed on a rally up to $45.

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!

Good luck!

Christian Tharp, CMT