After reaching an important support level, AppFolio, Inc. (APPF) could be a good stock pick from a technical perspective. APPF recently experienced a "golden cross" event, which saw its 50-day simple moving average breaking out above its 200-day simple moving average.
Considered an important signifier for a bullish breakout, a golden cross is a technical chart pattern that's formed when a stock's short-term moving average breaks above a longer-term moving average; the most common crossover involves the 50-day and the 200-day, 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 APPF have been moving higher over the past four weeks, up 13.1%. Plus, the company is currently a #2 (Buy) on the Zacks Rank, suggesting that APPF could be poised for a breakout.
The bullish case solidifies once investors consider APPF'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.
Investors should think about putting APPFon their watchlist given the ultra-important technical indicator and positive move in earnings estimates.
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AppFolio, Inc. (APPF): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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