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.
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.
Editor, Chart Of The Day