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From a technical perspective, Aveanna Healthcare Holdings Inc. (AVAH) is looking like an interesting pick, as it just reached a key level of support. AVAH'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.
Considered an important signifier for a bullish breakout, a golden cross is a technical chart pattern that's formed when a stock's short-term moving average breaks above a longer-term moving average; the most common crossover involves the 50-day and the 200-day, since bigger time periods tend to form stronger breakouts.
There are three stages to a golden cross. First, there must be a downtrend in a stock's price that eventually bottoms out. Then, the stock's shorter moving average crosses over its longer moving average, triggering a positive trend reversal. The third stage is when a stock continues the upward momentum to higher prices.
This kind of chart pattern is the opposite of a death cross, which is a technical event that suggests future bearish price movement.
AVAH has rallied 18.8% over the past four weeks, and the company is a #2 (Buy) on the Zacks Rank at the moment. This combination indicates AVAH could be poised for a breakout.
Once investors consider AVAH's positive earnings outlook for the current quarter, the bullish case only solidifies. No earnings estimate has gone lower in the past two months compared to 2 revisions higher, and the Zacks Consensus Estimate has increased as well.
Given this move in earnings estimates and the positive technical factor, investors may want to keep their eye on AVAH for more gains in the near future.
This article originally published on Zacks Investment Research (zacks.com).
