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Blue Line Morning Express (Gold, Oil, S&P)

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Blue Line Morning Express

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Gold (December)

Last weeks close: Gold finished last week on a very strong note gaining about $8 on Fridays session and settling at 1304.6. The bulls clearly regained the edge on a close out above the .382 retracement and resistance at the 1300 mark. CPI data along with Retail Sales was disappointing on Friday and failed to follow up the glimmer of hope that the hawks saw from PPI on Thursday. Michigan Consumer Sentiment was great, reaching a 13-year high, but the main focus is inflation and Chicago Fed President Charles Evans made a point of this in his comments Friday.

Fundamentals: We continue to see a mixed bag of economic data and the inconsistency has been favorable to Gold all year. We must remember that the Federal Reserve set high expectations for three rate hikes this year at their meeting in December 2016. The inability to see enough growth or rather yet, inflation has kept these expectations curtailed. Heightened geopolitical fears along with drama in Washington and now Europe has helped maintain a healthy appetite for the metal. NY State Empire Manufacturing is due at 7:30 am CT today and Federal Budget Balance this afternoon. Industrial Production and Housing data along with more Fed speak come into focus through midweek. Weak economic data to round out last week has put pressure on the Dollar. Catalonia uncertainty has helped negate some of this, however, we ultimately expect to see a weaker Dollar help lift Gold.

Technicals: The metal has seen favorable price action into this morning trading to a session high of 1308.2 while holding major support at 1300.9-1301.8 with a low of 1303.2. This level also aligns with the 50 day moving average. After achieving a weekly close above the $1300 mark, the bulls are now in control with the next resistance level coming in at 1312.6. The Dollar Index settled just below its 200 week moving average after only one week with a clear close out above. The Dollar is setting up for a failure after taking out last years low in late August.

Bias: Bullish

Resistance 1312.6**, 1324.3**, 1341-1344.6***, 1362.4

Support 1300.9-1301.8**, 1291.8-1292.9*, 1280.9-1284.6**, 1262.8-1263.1***

Crude Oil (December)

Last weeks close: Favorable price action on Friday traded Crude to the highest level since September 29th. The tape elevated on tension in Iraq hitting the headlines along with OPEC chatter. Baker Hughes also reported that the rig count dropped 5. This was a strong reversal from Thursdays low and sets up for a retest of the late September highs this week.

Fundamentals: Crude Oil is up more than 1% this morning on mounting Iraq and Kurd tension that directly puts 120,000 bpd at risk. The real fear right now is how involved Turkey might become and any disruption with their pipeline that feeds into the Mediterranean. The Kurds who run their own region in Northern Iraq voted in favor of independence and fighting has ensued. Also buoying price action is OPEC chatter as they jawbone deeper cuts and a healthy demand outlook. Data out of China last night showed a surge in Crude imports.

Technicals: The bulls have the clear momentum after a strong reversal Friday has extended to the highest level since the September 28th failure and reversal. Tomorrow brings option expiration which could keep the rally in check but the momentum should carry into the November December contract roll that has already begun, November falls off the board Friday. Resistance comes in at 52.41, 52.86 and 53.11, each a separate level and a close out above here on the week could bring a clear path to 55.02. Only a close back below Fridays settlement of 51.73 will signal a failure.

Bias: Neutral/Bullish

Resistance 52.41**, 52.86**, 53.11***, 53.76*, 55.02***

Pivot 52.03

Support 51.73**, 50.82**, 49.81**, 49.44***, 48.55**

E-mini S&P (December)

Last weeks close: The S&P made new all-time highs in three out of 5 sessions last week and continues to be in a slow grind, melt-up after closing out above the 10-year trend at 2507.75 on September 29th. The NQ did not breakout until October 4th and has helped by bringing further fuel. This rally is not limited domestically, the German DAX made a new all-time high as well. Despite more mild expectations, earnings have been solid and a positive to the market.

Fundamentals: We are in the heart of earnings season and Netflix is due after the bell today. Goldman Sachs, Johnson & Johnson, IBM and United Healthcare are due tomorrow. Global stock markets are rallying and Asia has extended gains into this morning on the heels of strong Chinese data last night. The Fed began their balance sheet reduction last week, only this, Washington and a potential geopolitical surprise have a chance of derailing the equity market strength.

Technicals: There is nothing to fight right now, pullbacks are short lived and shallow. We do have resistance at 2558.50 but this only poses enough strength to encourage a consolidation or yet another short lived and shallow pullback. However, we have gone five sessions in a row without seeing a lower low, if you are not long and have not been long since the breakout above 2507.75 you must be more nimble and furthermore might find it in your best interest to wait for that lower low and use a .5% pull back to the 2540s before stepping in for a swing trade.

Bias: Neutral

Resistance 2558.50**, 2568*

Support 2439.25-2443**, 2507.75***

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Futures trading involves substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.

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About the author

Bill Baruch is President and founder of Blue Line Futures a leading futures and commodities brokerage firm located at the Chicago Board of Trade. Blue Line’s mission is to put the customer first and bring YOU the best customer service, consistent and reliable research and state of the art technology. Bill has more than a decade of trading experience. Working with clients he focuses on developing trading strategies that present a clear objective for both long and short-term trading approaches. He believes that in order to properly execute a trading strategy, there must be a well-balanced approach to risk and reward.

Prior to Blue Line, Bill was the Chief Market Strategist at iiTRADER which followed running a trade desk at Lind Waldock and MF Global.

Bill is a featured expert on CNBC, Bloomberg and the Wall Street Journal as well as other top tier publications.

Contributing author since 10/6/17 

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