Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of tanker operator Frontline Ltd. (FRO 0.77%) dropped 16% today after releasing earnings and a fairly dire outlook.

So what: Frontline said first-quarter loss was $12.1 million, or $0.13 per share. When excluding vessel sales, the loss was reduced to $3.6 million, or $0.04 per share, which was still $0.03 more than expected.  

The big concern was that management expressly admitted that without a "sustained improvement" in the tanker market, the company may not be able to repay its debt.

Now what: Frontline has debt that's due next year and, unless cash flow improves, it may need to sell shares or even consider restructuring, i.e., bankruptcy, to keep the company operational. With U.S. oil imports falling and new routes yet to pick up the slack, I wouldn't have much confidence that this is going to happen. I'd stay out of the tanker market just because of the risk and see no evidence from Frontline that the market is improving quickly.