WK Kellogg Co. (KLG) is looking like an interesting pick from a technical perspective, as the company reached a key level of support. Recently, KLG'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.
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.
A golden cross is the opposite of a death cross, another technical event that indicates bearish price movement may be on the horizon.
KLG could be on the verge of a breakout after moving 34.7% higher over the last four weeks. Plus, the company is currently a #3 (Hold) on the Zacks Rank.
Looking at KLG's earnings expectations, investors will be even more convinced of the bullish uptrend. For the current quarter, there have been 2 changes higher compared to none lower over the past 60 days, and the Zacks Consensus Estimate has moved up as well.
Investors should think about putting KLG on their watchlist given the ultra-important technical indicator and positive move in earnings estimates.
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This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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