Cass Information Systems, Inc (CASS) reached a significant support level, and could be a good pick for investors from a technical perspective. Recently, CASS'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.
Golden crosses have three key stages that investors look out for. It starts with a downtrend in a stock's price that eventually bottoms out, followed by the stock's shorter moving average crossing over its longer moving average and triggering a trend reversal. The final stage is when a stock continues the upward climb 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.
CASS could be on the verge of a breakout after moving 5.1% higher over the last four weeks. Plus, the company is currently a #2 (Buy) on the Zacks Rank.
The bullish case solidifies once investors consider CASS's positive earnings outlook. For the current quarter, no earnings estimate has been cut compared to 1 revision higher in the past 60 days. The Zacks Consensus Estimate has increased too.
Given this move in earnings estimates and the positive technical factor, investors may want to keep their eye on CASS for more gains in the near future.
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Cass Information Systems, Inc (CASS): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).