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AAR Corp. (AIR) is looking like an interesting pick from a technical perspective, as the company reached a key level of support. Recently, AIR's 50-day simple moving average crossed above its 200-day simple moving average, 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.
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.
This kind of chart pattern is the opposite of a death cross, which is a technical event that suggests future bearish price movement.
AIR could be on the verge of a breakout after moving 19% 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 AIR's positive earnings outlook for the current quarter. There have been 1 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 AIR for more gains in the near future.
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