Don't Ignore This Chart!

Prime Example Of An Untradable Stock

 | 

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

Announcement from the Author

{{ announcement.content }}

Tom Bowley
About the author: co-founded Invested Central in 2004 and served as the site's Chief Market Strategist for more than 10 years. Invested Central provides stock market education and guidance for those interested in making their own financial decisions. During his tenure at Invested Central, Tom co-hosted Market Open LIVE, a national radio broadcast that covered many of the largest markets across the U.S. In addition, he has spoken at various conferences throughout the United States and Canada and has taught thousands of traders across the globe how to trade equities more wisely with an emphasis on managing risk and intermarket relationships. Learn More
Subscribe to Don't Ignore This Chart! to be notified whenever a new post is added to this blog!
comments powered by Disqus