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Colgate-Palmolive (CL) Just Flashed Golden Cross Signal: Do You Buy?

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.

Moving Average Chart for CL
Moving Average Chart for CL

Investors should think about putting CL on their watchlist given the ultra-important technical indicator and positive move in earnings estimates.

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