Dorman Products (DORM) Just Flashed Golden Cross Signal: Do You Buy?
Dorman Products, Inc. (DORM) reached a significant support level, and could be a good pick for investors from a technical perspective. Recently, DORM's 50-day simple moving average broke out above its 200-day moving average; this is known as a "golden cross."
A golden cross is a technical chart pattern that can signify a potential bullish breakout. It's formed from a crossover involving a security's short-term moving average breaking above a longer-term moving average, with the most common moving averages being 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.
This kind of chart pattern is the opposite of a death cross, which is a technical event that suggests future bearish price movement.
DORM could be on the verge of a breakout after moving 16.7% higher over the last four weeks. Plus, the company is currently a #2 (Buy) on the Zacks Rank.
The bullish case only gets stronger once investors take into account DORM's positive earnings outlook for the current quarter. There have been 3 upwards revisions compared to none lower over the past 60 days, and the Zacks Consensus Estimate has moved up as well.
With a winning combination of earnings estimate revisions and hitting a key technical level, investors should keep their eye on DORM for more gains in the near future.
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