Should You Buy Sensata (ST) After Golden Cross?

Sensata Technologies Holding N.V. (ST) is looking like an interesting pick from a technical perspective, as the company reached a key level of support. Recently, ST'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.

There are three stages to a golden cross. First, there must be a downtrend in a stock's price that eventually bottoms out. Then, the stock's shorter moving average crosses over its longer moving average, triggering a positive trend reversal. The third stage is when a stock continues the upward momentum 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.

Shares of ST have been moving higher over the past four weeks, up 9.8%. Plus, the company is currently a #2 (Buy) on the Zacks Rank, suggesting that ST could be poised for a breakout.

Looking at ST's earnings expectations, investors will be even more convinced of the bullish uptrend. For the current quarter, there have been 1 change higher compared to none lower over the past 60 days, and the Zacks Consensus Estimate has moved up as well.

With a winning combination of earnings estimate revisions and hitting a key technical level, investors should keep their eye on ST 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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