While it’s always rewarding to catch the meat of a swing trade, to do so requires a fair bit of analysis, some confluence of technical events and, don’t kid yourself, a good dose of opportune timing. Looking beyond the swing trading time frames, monthly charts will give useful perspectives on target prices and therefore the scope for potential moves. Often, shorter time frames will give misleading signals for trades unless juxtaposed against longer term trends.
Today, we’ll discuss two separate stocks with vastly different fundamental businesses, but both with compelling longer term charts showing strong accumulation. One is BRKS, Brooks Automation.
We can see from this long term chart that it has recently broken away from a multi year base and thus, little obvious resistance is at hand. Throughout all of the last year, BRKS has exhibited superior relative strength to the Nasdaq index, which itself has been the strongest of the popular stock indices. The 50 period moving average has contained all pullbacks and the price is nearing that area once more. BRKS has a long way to go on the long side.
Another issue with similar long term accumulation is FAST, or Fastenal.
We can again observe that FAST has a consistently positive monthly chart, but which has been mired in a sideways band for the past five years. To repeat the old wisdom, the longer the base, the bigger the move and FAST’s recent move to a new high area beyond the monthly range bodes very positive for further price gains over the years to come.
While the overall market has been threatening to correct and with many indicators hinting at such, both BRKS and FAST may be dragged down by the overall market wave. We would be looking to buy on weakness.