Colgate-Palmolive Company (CL) reached a significant support level, and could be a good pick for investors from a technical perspective. Recently, CL's 50-day simple moving average broke out above its 200-day moving average; this is 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 contrasts with a death cross, another widely-followed chart pattern that suggests bearish momentum could be on the horizon.
CL has rallied 7.1% over the past four weeks, and the company is a #3 (Hold) on the Zacks Rank at the moment. This combination indicates CL could be poised for a breakout.
Once investors consider CL's positive earnings outlook for the current quarter, the bullish case only solidifies. No earnings estimate has gone lower in the past two months compared to 8 revisions higher, and the Zacks Consensus Estimate has increased as well.
Investors should think about putting CL on their watchlist given the ultra-important technical indicator and positive move in earnings estimates.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report