Should You Buy Southern Missouri Bancorp (SMBC) After Golden Cross?

After reaching an important support level, Southern Missouri Bancorp, Inc. (SMBC) could be a good stock pick from a technical perspective. SMBC recently experienced a "golden cross" event, which saw its 50-day simple moving average breaking out above its 200-day simple moving average.

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.

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 is the opposite of a death cross, another technical event that indicates bearish price movement may be on the horizon.

SMBC has rallied 12.2% over the past four weeks, and the company is a #2 (Buy) on the Zacks Rank at the moment. This combination indicates SMBC could be poised for a breakout.

The bullish case only gets stronger once investors take into account SMBC's positive earnings outlook for the current quarter. There have been 1 upward revision 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 SMBC 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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