Prior to the opening bell on Tuesday, Fastenal (FAST) confessed to below consensus revenues and EPS, normally a big problem for a stock. Sure enough, FAST fell approximately 4% on the open Tuesday, providing short sellers a quick profit. The problem, however, is that FAST is trading within a multi-year trading range off of an uptrend. The failure of earnings news to generate a breakout or a breakdown could result in this long-term trading range continuing for quite some time. Furthermore, the current price resides exactly in the middle of price support and price resistance. It's simply not a trading candidate at current price - in my view. Take a look:
The above long-term pattern is bullish so I guess I'd err on the long side if I had to trade it, but it could be months or even years before we see a breakout. Therefore, my only interest here would be if FAST were to drop closer to the bottom of this trading range.
Happy trading!
Tom
