Lear Corporation (LEA) reached a significant support level, and could be a good pick for investors from a technical perspective. Recently, LEA’s 50-day simple moving average broke out above its 200-day moving average; this is known as a “golden cross.”
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 is the opposite of a death cross, another technical event that indicates bearish price movement may be on the horizon.
LEA could be on the verge of a breakout after moving 7.2% higher over the last four weeks. Plus, the company is currently a #2 (Buy) on the Zacks Rank.
Once investors consider LEA’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 5 revisions higher, and the Zacks Consensus Estimate has increased as well.
With a winning combination of earnings estimate revisions and hitting a key technical level, investors should keep their eye on LEA for more gains in the near future.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Lear Corporation (LEA) : Free Stock Analysis Report