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After Golden Cross, Advanced Energy Industries (AEIS)'s Technical Outlook is Bright
From a technical perspective, Advanced Energy Industries, Inc. (AEIS - Free Report) is looking like an interesting pick, as it just reached a key level of support. AEIS's 50-day simple moving average crossed above its 200-day simple moving average, which is known as a "golden cross" in the trading world.
There's a reason traders love a golden cross -- it's a technical chart pattern that can indicate a bullish breakout is on the horizon. This kind of crossover is formed when a stock's short-term moving average breaks above a longer-term moving average. Typically, a golden cross involves the 50-day and the 200-day moving averages, since bigger time periods tend to form stronger breakouts.
A successful golden cross event has three stages. It first begins when a stock's price on the decline bottoms out. Then, its shorter moving average crosses above its longer moving average, triggering a positive trend reversal. The third and final phase occurs when the stock maintains its upward momentum.
A golden cross contrasts with a death cross, another widely-followed chart pattern that suggests bearish momentum could be on the horizon.
Shares of AEIS have been moving higher over the past four weeks, up 10.2%. Plus, the company is currently a #3 (Hold) on the Zacks Rank, suggesting that AEIS could be poised for a breakout.
The bullish case only gets stronger once investors take into account AEIS's positive earnings outlook for the current quarter. There have been 5 upwards revisions compared to none lower over the past 60 days, and the Zacks Consensus Estimate has moved up as well.
Investors should think about putting AEIS on their watchlist given the ultra-important technical indicator and positive move in earnings estimates.