Riddle Me This...

Assume you have a $25,000 account. You are looking to place a trade on Fastenal (FAST)...

First off, would you trade this? If so, when...how much would you trade...and what would your target price be on this set-up? Leave your comments on the comments page, and tomorrow I will follow up on this with a thorough analysis.

Maybe, but certainly not yet. I see a prior ascending triangle breakout with a $44 target, which it came close to. What concerns me is the recently failed bull flag

If I were going to trade this, i'd be looking for a retest/support bounce at $40, or at least off the moving average, which has been used as support recently. As a retest of the triangle, i'd need to see $40 hold. For a support bounce off the MA, i'd need to see volume pick up on the bounce or the indicators turn up, neither of which has happened yet.

I'm not going to go through an analysis because i simply see no reason to take a trade right now.

Jeff,
I'd trade it two ways.
Trade one...wait for a breakout with volume above 42. Dec40 call Target $45 two contracts.

Trade two...play the bounce (It looks like it's bouncing off diagonal support.Confirm with MACD and volume increase. Two contracts Dec35 call Target $45
Mental stop at about $40.

Richard Jones

could this possibly be a bull flag forming with about 4 points to the up side with a breakout over the next few days between 41 and 42?

yes to the first three comments except I see reward/risk at 3:1 and I would take the trade off any high volume bounce at 40.5.

would expect price movement in 7-10 days if market turns bullish????

Dec 40 call @ 2.70

Brian K

WIth it hitting horizontal support, the 200dMA and close to the 30dMA, I'd wait for more confirmation to the upside before taking a trade. Also there is a channel forming from beginning of August with numerous touches at the highs and lows along the way. It could just as easily pull back to that channel line before going up.

Sorry, forgot to put name in the above comment.
John Kevan

I would not place a bullish trade. FAST has failed to make a higher high, or even reach it previous high (unless it is consolidating around the $41 area). The TRAN industry looks to be showing some weakness as the MACD are getting lower highs since September. However, if FAST breaks over $44 I would reconsider a bullish play.

-M

Jeff,

I wouldn't trade it yet. If I got a bounce off support at $40, I'd think about it. I'd expect a $4 move. Using a December $40 call,I'd buy 4 contracts and risk $1.25 per option...

Jeff -

Might an ascending triangle be forming again? Have multiple touches on resistance but only one on diagnoal support. If a second support bounce is established, would consider a December $45 call. Need to look for decreasing volume as we near the apex of the triangle and then increased volume to break up. Assuming a $25K account value, risking 1% for position sizing would allow a total loss of $250 should my analysis be incorrect. This would provide for 5 contacts (ask 0.50)and I would expect a target of $45 in 10-14 days leaving 30 days of additional time. This would bring the call to an ATM and cause increase in time value even if no intrinsic value is achieved.

Here's what I see on this trade. A pennant formation waiting for a breakout. Flagpole about $6. Bullish on the stock, but I would wait for a close above $41.74 (breakout of the formation) and good volume to enter the trade. It took approx 1 month to make a $6 move, so a decent trade would be 6 contracts on the Dec 45 calls at .80 after the breakout (calls are now .50, but at the breakout the cost would go up). Keeping with the 2% position size, with a 25k account, that would put the loss at $480.00 if I lost it all. Target for the stock would be $6 from the breakout above $41.74 so that makes it $47.74. If it reaches that by expiration, the calls would be worth $3.74 each. A pretty good risk reward - 4:1

Jeff, I see a bull flag with a pole running $39 to $43.25 +/-. I would enter with strong volume and a close above the top flag trend line (tomorrow it would be a close above $42.) My target is +/- $4.25, length of pole. I would enter with a maximum $5,000 and a maximum loss/stop of $500.
Thanks for the challenge.
Karen

This looks to be trending down on weekly MACD so I would not get in on a bullish trade right now. I'd look for a turn in weekly MACD and an up turn in atochastic after a bounce off support at 38 or 40. Price target would be 46 with a tightening of my stop around 43

An uptrending stock in consolidation for almost 2 weeks...
ready to potentially break out if the volume increases....
2 patterns seen:
1. An ascending triangle - support at 41.50....enter above 41.50 on increased volume... exit 45.5 based on recent 4 point moves....(if the volume increases significantly....could reach 49.50...based on width of triangle)...
2. Channel - bounce off of support of 41 on increased volume....would be signal to enter.....with a target of 45.50.....

I would wait for increasing volume before entering a trade and buy the Dec 40 Call....split the bid/ask price (2.55/2.70) about 2.65 and buy 2 contracts...using about 2% of the total account.... I would choose to follow the channel pattern....enter around 41.50 and exit at 45.50...If the stock closes 41 or below ....I would be out immediately...
Danuta

I see an AT breakout on 10/10-10/11 with an approx. $6 target. Stock is now returning to test new support (old resistance) of breakout; offering a potential second entry opportunity. Pull back has not been on excessive volume, but on average volume. I also see the BF with the same $6 move targeted. Price target is $46.00 BF move took only one months time. A break above 41.50 with avg. to 1.2% volume would qualify as an entry for me.

Taking a 1% risk on $25K would give me a $250 max. risk. Seeing the BF time of one month with same target as original AT I would buy four Dec. $45 calls(Tonight at .60). I would be prepared to risk all and stay in my risk guidelines, but would exit if stock looking to
close below $40.45.

Ascending triangle.
Enter break of 41.70 on volume, has to have vol based on previous indecision.
Target 44.
Dec 45 call. 2 contracts
Exit break of 41.

Hi Jeff, I wouldn't trade this stock just yet. there are to many others out there that look like vno and tds.

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