Morning Market Thoughts

by DAN Good morning. The big news this morning is our good friends in Saudi Arabia were unable to strike a deal relating to oil output that would have stabilized oil prices. A meeting in Doha between 16 global OPEC and non-OPEC producers failed to come up with an agreement to freeze production. This is obviously causing a selloff in oil prices and they fell to well below $40/bbl over the weekend and even into early morning trading. They are stabilizing this morning, but it looks like a bad day for the oil stocks, which will also weigh on the broader market. Since we are already at resistance, I view the oil issue as just the stated reason for a pullback. If it wasn’t Doha, it would have been something else.

The market is tired and cranky and needs a time out for a while.

Earnings are going to start coming fast and furious this week and into next week. If you look at my Weekend Update notes, you’ll see that I have posted the release dates of companies that I deem to be important. I’ll re-post it here in this morning’s note.

One thought that I want to share this morning is about planning. Behind any successful business, you will find a business plan. How will the company grow? How will it execute its core business? Is there a plan to expand into other territories, etc? You see this in every episode of The Profit. Marcus Lemonis, founder of Camping World, always says, “If you don’t know your numbers, you don’t know your business.”

In trading, it is essential to have a plan for each trade, and for your portfolio. And once you have a plan, it’s even more important to stick with it. If you are always deviating from your plan, then why go to the time and effort to make one? Just wing it instead. It’s more fun and exciting. It’s also unprofitable.

Why exactly are you making this trade?
What is your expected time frame?
Where is your price target?
How far would the stock have to fall in order to make you change your mind about the trade?
How much money are you risking on the trade? (Share size x dollar difference between entry and stop = your risk)

These are some of the questions you should be able to answer before you make each trade. In answering those questions, you are craffting a plan for the trade. If the plan is good, then the trade will be good. It might not be profitable, but it will still be a good trade. Trading involves losing, so all trades aren’t going to be winners. But all trades should have a thoughtful plan that considers upside and downside. With the right plan, the money takes care of itself. As you get more experience, your recognition of opportunities improves, and you’ll become much more discriminating in the trades that you do make.

And that is your road from beginner to winner.

OK, here is a list of some of the stocks that matter this weeks:

MONDAY

MS
HAS
PEP
JBHT

TUESDAY
JNJ
GS
UNH
PM
KSU

WEDNESDAY
KO
USB
TXT
ABT
CHKP
CP

THURSDAY
UA
GM
LUV
ALK
HA
BIIB
VZ
BX
DHI
PHM
SHW
UNP
TRV

FRIDAY
AAL
MCD
GE
CAT
KMB
HON
LYB

See you in the forum.

–Dan

Market Update