$FAST, Fastenal Company

Trade Date: 04/11/17

Classic ‘What the, what?!” moment in the market with $FAST today. If you haven’t seen Festenal’s headline today, you might be surprised to know that it met Wall Street expectations. The industrial fastener producer posted revenue of $1.05 billion and an EPS of $0.46. This is just another prime example of technical analysis putting the moves on the fundamentals.

Trade Style: Day Trade

Position Bias: Bearish

Technical Criteria

  • Price Change: - $ 2.54 and -5.05%
  • Premarket Volume: 55,840  shares
  • Daily Average Volume: 1.99 million shares
  • Average True Range: $ 0.96

Entry Price & Time

            After a solid drop in the 2nd candle, $FAST didn’t look like it was going to break lower anymore, at first. If it violated the bear flag setup and continued higher, I was prepared to walk away. But it came back down and broke beneath the low of $47.39. Once I had price confirmation I entered the trade.

            Entry Price: $66.31

            Entry Time: 9:34 AM

            Stop Price: $67.51

            Risk: $1.15

$FAST entry on 1 min. chart

Trade Management and Psychology

            It always sucks when the price turns against you almost immediately after you enter the trade. At 9:42AM when $FAST climbed higher towards my exit, (I’m not going to lie), I was pooping my pants a little. One trick I picked up was to close my charts when I get nervous. I have a hard stop at $48.31, so all I did was watch the print for that price.

            Yes, the stock broke above the moving averages. Yes, the stock was trending higher. Yes, it might even be on big volume. But it never hit my stop. It helps to forget about all the frivolous details and focus on the price.

Exit Price & Time

            I listened to my rules and exited at 3:30 PM at the end of the day. But man it sucked to watch it drop like a ton of bricks. Oh well, this doesn’t happen all the time so I’m grateful for the small win and that I listened to my rules.

            Exit Price: $ 46.85

            Exit Time: 3:30 PM

$FAST exit on 5 min. chart

$FAST Trade Executions

Results and Evaluation

            $FAST had its ups and downs but at the end, probability was on my side. Sometimes it takes an entire day before the stock decides to fall. That’s what my trading rules are designed to accommodate. Forget about small losses and hold on to winners.  

            On another note - this may sound counter-intuitive but try to not care about the results of your trade. It can cloud your judgment. Instead try shifting your focus to staying true to your rules. It just might be that small adjustment you need. 

Risk: $ 0.95

Reward: $ +0.51

R Multiple: +0.53 R