What’s your daily “routine” like? By that I mean, what are the things you do every morning when you start your day? I’m talking about pre-market opening stuff, not the “I get up, take a piss, scratch myself and grab a cup of coffee” kind of stuff.
Do you even have a routine? Are you up at the same time every morning? Do you do the same things to start your day, day after day? Or do you simply fall out of bed, splash cold water on your face and lazily make your way to work or the computer in a stupor?
What I’m talking about are the things that you do consistently, day in-day out, that keep you on track. I would say that the vast majority of successful traders and investors have a specific set of things that they do each morning, in sequence, as they begin to assess the market prior to the opening.
Much of my pre-market routine actually starts the night before.
1. I review market activity; what happened for the day; I look at the NYSE and Naz action to get a feel for what may happen during the next trading session.
2. Then I check the business and world news headlines aftermarket and in the evening; I also make note of any aftermarket earnings releases. (As an aside, one thing that I do on weekends is enter on my calendar, the economic data releases and companies that are reporting earnings for the coming week, that I have positions in. This is not an option. I look at this as a “must do” if I want to stay on top of the market.)
3. I then view my updated portfolio(s) each evening, looking at the price action on my positions and determine what actions I may want to take for the next day, if any.
4. Next come the charts. Charts on the indices. Charts on my positions. Charts on my candidates list. Charts on Dow stocks. Lots of charts (PnF) to get a feel for the supply and demand forces in the market.
[For you dedicated chart chompers: ….Someone once told me that you really don’t develop proficiency and expertise in trading until you’ve viewed at least one million charts! I know of one trader that looks at the charts of every stock in the S&P 500, every day! Sometimes 2 times a day. If you spend an average of 20 – 30 seconds on each chart, looking at the price levels, gauging support, resistance, breakout points, breakdowns, etc. …do the math. How much time would you have to spend in a day to look at all 500 stocks in the S&P? About 4 -to 5 hours, right? That’s pretty extreme. Most of us are not that dedicated (or obsessed) with our craft. Think about it. Five hundred charts a day, about 300 days a year. That’s 150,000 chart views a year. At that level, you’re looking at 6 to 7 years before you hit a million charts viewed. But can you imagine the kind of proficiency and pattern recognition you’d have on about 500 stocks?]….My morning routine looks like this:
1. I check the overnight news. What happened in Asia? Europe? What are the futures prices doing? What are commodities doing?
2. I take a look at the sector activity. One simple way is to analyze the sector ETFs like I outlined in a post earlier yesterday.
3. Also look at the market breadth. I like to compare the relative strength (RS) of the cap weighted S&P 500 index vs. an equal weighted S&P index. You can do this by simply comparing SPY vs. RSP for relative strength.
4. Which market cap is more favored? Which one shows the highest RS? Large, mid, small?
5. Which style is more favorable? Growth, value, blend?
[Right now, Mid Cap Growth is showing the highest RS, followed by Mid Cap Blend and Large Cap Growth. Taking into account the favorable sectors, you can then narrow things down to the stocks within a sector that show these favorable style characteristics. That is how I do it. I’m not saying it’s the best way. But, it works for me.]6. Finally, I look at the global picture. Where is capital flowing to? Which region? Which country? Again, the beauty of ETFs is that you can now track and analyze a specific country index. Without going into it, right now….Emerging markets, especially Latin America look the strongest.
Happy Friday.
If you enjoy the content at iBankCoin, please follow us on Twitter
