Helios Technologies (HLIO) Just Flashed Golden Cross Signal: Do You Buy?

Helios Technologies, Inc (HLIO) is looking like an interesting pick from a technical perspective, as the company reached a key level of support. Recently, HLIO's 50-day simple moving average crossed above its 200-day simple moving average, known as a "golden cross."

There's a reason traders love a golden cross -- it's a technical chart pattern that can indicate a bullish breakout is on the horizon. This kind of crossover is formed when a stock's short-term moving average breaks above a longer-term moving average. Typically, a golden cross involves the 50-day and the 200-day moving averages, 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.

This kind of chart pattern is the opposite of a death cross, which is a technical event that suggests future bearish price movement.

Over the past four weeks, HLIO has gained 38.3%. The company currently sits at a #1 (Strong Buy) on the Zacks Rank, also indicating that the stock could be poised for a breakout.

Looking at HLIO'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 HLIO 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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