Fastening Profit Potential with Fastenal Co.

Yesterday, we looked at a Daily Price Chart of Carrier Global Corp., noting that the stock has been making a series or higher highs and higher lows.

Today’s Chart of the Day is a Moving Average Convergence/Divergence (MACD) chart for Fastenal Co. (FAST).

Fastenal Company — together with its subsidiaries — engages in the wholesale distribution of industrial and construction supplies in the United States, Canada, Mexico, North America, and internationally. It offers fasteners and related industrial and construction supplies under the Fastenal name. The company’s fastener products include threaded fasteners, bolts, nuts, screws, studs, and related washers, which are used in manufactured products and construction projects, as well as in the maintenance and repair of machines.

Now, below is a Daily Price Chart with a 12/26/9 MACD indicator for Fastenal Co. The MACD Chart is shown below the Daily Price Chart.

The FAST Daily Price Chart below shows that FAST stock is in a price uptrend as the 12/26 Day MACD line (black line) is above the 9-Day EMA (purple line).

MACD lines were created to help traders verify the momentum of any given stock’s price. MACD lines are plotted by subtracting the longer-term Exponential Moving Average from the shorter-term Exponential Moving Average. In this example we are using the most common parameters, the 26-Day Exponential Moving Average and the 12-Day Exponential Moving Average.

chart of the date

When the 26/12 Day MACD line crosses the 9-Day EMA line, this either signals a ‘buy’ or a ‘sell.’ When the 26/12 MACD crosses above the 9-Day EMA, this is a ‘buy’ signal and when the 26/12 MACD crosses below the 9-Day EMA, this is a ‘sell’ signal.

MACD charts also include a histogram bar graph. This portion of the chart helps to indicate when a stock’s momentum is either accelerating or slowing. When a crossover initially occurs, the histogram’s bar will be near flat as the two indicator lines have converged. As the 26/12 MACD and 9-Day EMA lines begin to separate, the bars grow in height, indicating a widening gap and acceleration for the stock’s momentum. When the histogram’s bars begin to shrink this indicates a narrowing of the gap between the 12/26 Day MACD and the 9-Day EMA, and a slowing of the stock’s momentum.

When the histogram bars begin to shrink, this can be a signal that a crossover of the indicator lines could happen soon.

As you can see in the chart above, once the MACD line crossed above the 9-Day EMA, FAST’s share price began to rise.

If you had purchased FAST shares when the MACD ‘buy’ signal occurred for the stock back on July 17 when it was around $44.20, you’d be up 8.7% by now.

Not a bad profit for less than a three week-long hold of a major hardware producer.

We will continue to monitor FAST as long as the stock’s momentum continues its bullish run.

Best Regards,

Chuck Hughes
Editor, Chart Of The Day

Chuck Hughes

Written By Chuck Hughes

Before Chuck Hughes won 10 Trading Championships, he was an accomplished Air Force pilot. In fact, he credits his success as a stock and options trader to his disciplined upbringing and career. When he was deciding between a career in the Navy and a career in the Air Force, the Navy told him he’d only have a 33% chance of flying jets. The Air Force gave him 100%. He liked those odds better. 35 years ago, Chuck had a wife, a young daughter, a son on the way, and a huge mortgage to afford. He didn’t want to give up on his lifelong dream and stop flying for a major commercial airline. He knew he needed to supplement his income during the 15 days a month he wasn’t flying. So he used his experience in discipline and math, and his understanding of finance and the stock markets (which he’d always been interested in,) and opened a $4,600 trading account. He made over $460,000 in profits his first two years of trading, and he hasn’t looked back since. When he was diagnosed with Meniere’s disease 15 years later, which commonly leads to vertigo…He knew his career as a pilot wouldn’t last much longer with those odds. But he didn’t have to scurry to find another gig, or panic about how his family would eat… He’d spent the last 15 years perfecting his system and raking in cash. As an options trader, Chuck does not let his emotions get in the way of his trading strategy. He adheres to disciplined and methodical options and stock trades. Because he respects the options game so highly, and understands the true freedom that financial solvency can bring, Chuck was able to design and refine his system and win those 10 Trading Championships. Put simply, Chuck Hughes’ trading strategies work, and in all types of market conditions. They’ve worked throughout the bull, bear, and flat markets America has seen in the last 30 years. Chuck Hughes has spent that time building a reputation as one of the most trustworthy options traders in the industry. His publishing group Legacy Publishing LLC was one of the few trading groups on the planet to have correctly predicted and profited from the 2008 financial crash .As a published author 16 times over, a 10-time Trading Championship winner, and an options-trading teacher for 25 years, he’s learned to trade and teach without an ego.