Alector (ALEC)'s Technical Outlook is Bright After Key Golden Cross

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

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.

A golden cross is the opposite of a death cross, another technical event that indicates bearish price movement may be on the horizon.

ALEC could be on the verge of a breakout after moving 11.7% higher over the last four weeks. Plus, the company is currently a #3 (Hold) on the Zacks Rank.

The bullish case solidifies once investors consider ALEC's positive earnings outlook. For the current quarter, no earnings estimate has been cut compared to 4 revisions 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 ALEC 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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