Should You Buy AXT (AXTI) After Golden Cross?

AXT Inc (AXTI) is looking like an interesting pick from a technical perspective, as the company reached a key level of support. Recently, AXTI's 50-day simple moving average crossed above its 200-day simple moving average, 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.

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.

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 AXTI have been moving higher over the past four weeks, up 24.7%. Plus, the company is currently a #3 (Hold) on the Zacks Rank, suggesting that AXTI could be poised for a breakout.

The bullish case solidifies once investors consider AXTI'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.

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

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This article originally published on Zacks Investment Research (zacks.com).

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Source Zacks-com