Our Chart Scanner has become an incredibly popular and useful tool for clients as it gives a user the ability to quickly scan through hundreds of charts in order to find the most attractive (or unattractive) patterns. Included with the tool are a number of pre-defined screens that allow users to see, for example, stocks that just experienced a golden or death cross.
A Golden Cross occurs when a stock’s upwardly sloping 50-day moving average (DMA) crosses above its 200-DMA, which also has to be rising. Conversely, a Death Cross occurs when a downwardly sloping 50-DMA crosses below the 200-DMA, which also has to be moving lower. Technicians consider Golden Cross formations to be a positive signal, while a Death Cross is considered negative. Although it is valuable to look at Golden and Death Cross formations, as we have pointed out in the past, they are not always reliable buy or sell signals. With that caveat, though, today we wanted to highlight two recent examples of a Golden Cross formation where each stock tended to show positive returns going forward.
Below is our first example, Helen of Troy (HELE), which saw a Golden Cross yesterday. HELE is a producer of household goods and beauty products and also owns the wildly popular Hydro-Flask brand. While the stock has seen mixed returns in the short run following its six golden cross formations since 2007, over the following three months, HELE had positive returns five out of six times for an average gain of 11.61% (median: 9.73%).
With summer around the corner, instead of water, you may just want to fill up your Hydro-Flask with your favorite cocktail, and Constellation Brands (STZ) has everything you’ll need on that front. The producer of various spirits, Corona beer, Mondavi wine, and many others also saw a Golden Cross yesterday. Similar to HELE, STZ has tended to see positive returns following prior golden cross formations going all the way back to 2000. Following five of the prior eight golden crosses for the stock since 2000, the stock saw positive returns over the following week and month, but three months later, STZ’s performance was even stronger with an average gain of 11.6% (median: 15.8%) and gains three-quarters of the time. Helen of Troy and Constellation Brands – a perfect match for summer!
For full access to our Chart Scanner tool and its daily screens, start a two-week free trial to Bespoke Premium now.