Bassett Furniture Industries, Incorporated (BSET) is looking like an interesting pick from a technical perspective, as the company reached a key level of support. Recently, BSET's 50-day simple moving average crossed above its 200-day simple moving average, 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.
BSET has rallied 28.3% over the past four weeks, and the company is a #1 (Strong Buy) on the Zacks Rank at the moment. This combination indicates BSET could be poised for a breakout.
Once investors consider BSET'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 1 revision higher, and the Zacks Consensus Estimate has increased as well.
Investors should think about putting BSETon their watchlist given the ultra-important technical indicator and positive move in earnings estimates.
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Bassett Furniture Industries, Incorporated (BSET): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).