A stock scan performed after the close on Wednesday for “the cross” found one stock that might be instructive. There were no ‘golden crosses’ with today’s market action:

1. America’s Car-Mart, Inc. (NASD:CRMT)

CMRT is in the used car retail industry. Talk about a ‘double whammy’ for CMRT. They run two subsidiaries businesses:

1. Sells older used vehicles via America’s Car-Mart.
2. Provides financing for substantially all of its customers via Colonial Auto Finance, Inc.

Daily Chart with InVivo Swing Trading Tools

Right now, the company is not one, but TWO really tough businesses that are feeling lots of pain. Automakers begging for a hand out and the credit crisis have frozen financing for everything including cars. Let’s see what they say in their earnings in early December.

America’s Car-Mart (CRMT)

Daily Chart with 50- and 200-day Moving Average

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.

A Word About Stock Picking
What you should do with these ideas are up to you. We believe individual investors should make speculative trades in individual stocks only with mad money after fully funding retirement accounts according to a balanced portfolio strategy. 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?