After reaching an important support level, The Walt Disney Company (DIS) could be a good stock pick from a technical perspective. DIS recently experienced a "golden cross" event, which saw its 50-day simple moving average breaking out above its 200-day simple moving average.
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.
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.
A golden cross is the opposite of a death cross, another technical event that indicates bearish price movement may be on the horizon.
Shares of DIS have been moving higher over the past four weeks, up 17.8%. Plus, the company is currently a #2 (Buy) on the Zacks Rank, suggesting that DIS could be poised for a breakout.
The bullish case solidifies once investors consider DIS's positive earnings outlook. For the current quarter, no earnings estimate has been cut compared to 8 revisions higher in the past 60 days. The Zacks Consensus Estimate has increased too.
Investors should think about putting DIS on their watchlist given the ultra-important technical indicator and positive move in earnings estimates.
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