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Virco Manufacturing Corporation (VIRC) Just Flashed Golden Cross Signal: Do You Buy?

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Virco Manufacturing Corporation (VIRC) reached a significant support level, and could be a good pick for investors from a technical perspective. Recently, VIRC's 50-day simple moving average broke out above its 200-day moving average; this is 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.

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.

This kind of chart pattern is the opposite of a death cross, which is a technical event that suggests future bearish price movement.

Over the past four weeks, VIRC has gained 17.7%. The company currently sits at a #2 (Buy) on the Zacks Rank, also indicating that the stock could be poised for a breakout.

Looking at VIRC's earnings expectations, investors will be even more convinced of the bullish uptrend. For the current quarter, there have been 1 changes higher compared to none lower over the past 60 days, and the Zacks Consensus Estimate has moved up as well.

Moving Average Chart for VIRC
Moving Average Chart for VIRC

With a winning combination of earnings estimate revisions and hitting a key technical level, investors should keep their eye on VIRC for more gains in the near future.


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