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

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E-mini S&P (December)

Yesterdays close: Yesterday was a heck of a 5 point battle and even though I say this facetiously, the fact is the S&P set a new all-time high closing at 2557.

Fundamentals: Global equity markets are in the green this morning being led by Europe; the DAX is up .7%. Yesterdays session brought a mixed tape early despite strong headline earnings we saw the likes of Goldman Sachs initially rise 1.5% before turning south and finishing the session -2.6%. It will be important to watch the banking sector, XLF finished -.53% and KBE -.85%. Netflix even finished the session -1.58% though it is back in the green this morning. However, the session was boosted by Healthcare which was led by UnitedHealth finishing +5.53%. Johnson & Johnson finished +3.43%. There is a health care deal working itself through Washington and we will likely hear more on this today. We have earnings from Abbott Laboratories and U.S Bancorp among others before the bell today and from American Express and eBay among others after the close. Fed officials Dudley and Kaplan speak this morning at about 7:00 CT. Building Permits and Housing Starts are due at 7:30 am CT. Crude will be a mover with inventory data due at 9:30 am CT and Beige Book is on the schedule for 1:00 pm CT. As the entire picture looks rosy at the moment, it is important to remember that you can never be too comfortable. It is well known that North Korea remains a threat but traders should keep an ear to the ground on Chinas twice a decade Party Congress where they are discussing currency reforms among many other topics. We have GDP data out of China tonight.

Technicals: Resistance at the 2558.50 level brought more of an intermission. After only matching Mondays new all-time high yesterday of 2557.75, we now have seen the tape stretch above 2560. We maintain that there is no reason to fight this tape. However, if you have not capitalized at all between here and the breakout above the 10-year trend resistance at 2507.75 it would be prudent to wait for a pull back to the only true support at 2439.25-2443. Today would be the seventh session in a row with a higher low and we have now put in a new all-time high in five out of the last seven sessions. We will be watching 2558.50 on a closing basis.

Bias: Neutral

Resistance 2558.50**, 2568*, 2595-2600**

Support 2439.25-2443**, 2507.75***

Crude Oil (December)

Yesterdays close: December Crude settled at 52.11 after parring early losses from a low of 51.48. November Crude notched a close below the $52 mark on options expiration.

Fundamentals: Price action dipped yesterday on news that Iraq took back all Kurdish oil fields and planned to up output in the area to about 1 mbpd. The Kurds still control the pipeline that brings oil to the Turkish port of Ceyhan from the landlocked area of Iraq and flows are still slumping as of this morning. Inventories are squarely in the picture and API reported a much larger draw than expected yesterday at 7.13 mb vs the expected 3.9 mb. Traders were expected this draw to come on the higher side and furthermore, some of the surprise was offset by a build of 1.94 mb in Gasoline. Estimates for todays EIA data comes in at -4.242 mb Crude, -1.453 mb Distillates and +.256 mb Gasoline. A number in line with expectations to a marginally smaller drawdown will likely be muted as uncertainty in Iraq still looms. However, a bullish number ahead of the November contract expiration Friday would likely cause a melt-up effect.

Technicals: The December contract has continued to manage a settlement above the 52.03 mark. Support was tested and held yesterday morning; we updated that level in our video to 51.42-51.73. Today will hinge on the inventory data early but the bulls have a clear edge. We are watching 52.41 more on a closing basis, while 52.86 could be tested intraday, regardless, a close out above the three-tiered resistance could easily send price action to the 55.02 mark.

Bias: Neutral/Bullish

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

Pivot 52.03

Support 51.42-51.73**, 50.77**, 49.90**, 49.44***, 48.59**

Gold (December)

Yesterdays close: Gold settled at 1286.2 yesterday, holding key support by a thread.

Fundamentals: Right now, it is perceived that Janet Yellen will be out of the Fed Chair and a more hawkish Fed leader will be earmarked by President Trump. This might all be true, but it is important to remember that President Trump does not want to see a much stronger Dollar. Economic data is not showing robust growth and furthermore, we must remember that the currency only trades off of its pair and right now the Euro has some short-term question marks. Fed officials have continued to waffle with no real certainty and we have Dudley and Kaplan due to hit the tape around 7:00 am CT. Building Permits and Housing Starts are due at 7:30 am CT with Beige Book set for 1:00. The mixed bag from the Fed and from the data side have been supportive to Gold all year. Chinese data will take center stage tonight with GDP, Industrial Production, Fixed Asset Investment and Retail Sales. Traders should also watch Gold while noting Chinas twice a decade Party Congress is underway and any surprises could move the metal.

Technicals: Gold has reversed sharply this week and the bears are squarely in the near-term drivers seat. The metal managed to hold 1285.6-1286.2 on a closing basis but has bled further and is squaring away with the next key support at 1280.2-1281.1. The bulls must manage a close back above 1285.6-1286.2 to simply neutralize the weakness on the session but truly must achieve a close back above 1290.8 to neutralize it on the week. The bears look to achieve a close below first support to open the door for another 1% of selling. The Dollar Index continues to work higher from intermediate term oversold conditions but has tremendous overhead resistance for the next 1.5-2%.

Bias: Bullish/Neutral

Resistance 1290.8**, 1300.9-1302.3**, 1308.4-1312.6**, 1324.3**, 1341-1344.6***, 1362.4

Pivot - 1285.6-1286.2

Support 1280.2-1281.1**, 1262.8-1269***, 1243.6**

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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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