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Should You Buy Model N (MODN) After Golden Cross?

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After reaching an important support level, Model N, Inc. could be a good stock pick from a technical perspective. MODN recently experienced a "golden cross" event, which saw its 50-day simple moving average breaking out above its 200-day simple moving average.

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.

MODN could be on the verge of a breakout after moving 21.5% higher over the last four weeks. Plus, the company is currently a #2 (Buy) on the Zacks Rank.

Looking at MODN's earnings expectations, investors will be even more convinced of the bullish uptrend. For the current quarter, there have been 2 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 MODN

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

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