MainStreet Bank (MNSB) Just Flashed Golden Cross Signal: Do You Buy?

MainStreet Bank (MNSB) reached a significant support level, and could be a good pick for investors from a technical perspective. Recently, MNSB's 50-day simple moving average broke out above its 200-day moving average; this is known as a "golden cross."

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.

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.

Over the past four weeks, MNSB has gained 11.4%. The company currently sits at a #1 (Strong Buy) on the Zacks Rank, also indicating that the stock could be poised for a breakout.

Once investors consider MNSB'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 revisions higher, and the Zacks Consensus Estimate has increased as well.

Investors should think about putting MNSB 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).

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