A stock scan performed after yesterday’s close for “the cross” found two stocks that might be instructive:

1. First BanCorp. (NYSE:FBP)
2. Apple Inc. (NASD:AAPL)

The 50/200 “Cross”

The thesis goes something like this: the up or “golden” cross (50-day MA moves above 200-day MA) is supposed to be bullish while the down or “death” cross (50-day MA moves below 200-day MA) portends to weakness.

What you should do with these ideas are up to you. While we personally don’t trade based on this criteria, it always good to watch to see if traders take action. Quite often, the best trades follow the failure of these setups. We use a well-defined process to evaluate buy and sell signals. You may wish to investigate these ideas further with the following questions in mind:

• Which phase of the Investor Sentiment Cycle is this stock in?
• Is there a valid reason for entering this trade? Is there a technical trade setup on this chart?
• Is it smart to follow the dumb money? Read the landmark research paper by Mullainathan & Thaler.
• Is this a classic behavioral finance trap?
• Do I have a position sizing strategy? Are all of my eggs in one basket?
• What’s a good spot to place a stop loss?

First BanCorp. (FBP)

Daily Chart with 50- and 200-day Moving Average

Daily Chart with InVivo Swing Trading Tools

FBP is in the regional bank industry. It’s based out of Puerto Rico. How much exposure does this bank have to the subprime mess or other messes that everyone else is fighting? Let’s see how FBP does during this major credit crisis storm.

Apple Inc. (AAPL)

Daily Chart with 50- and 200-day Moving Average

Daily Chart with InVivo Swing Trading Tools

AAPL is in the computer hardware industry. Last couple of years it has made its investors very happy with there IPod and IPhone products. Will the new T-Mobile/Google mobile phone be a big competitor to Apple’s IPhone?