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

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E-mini S&P (December)

Yesterdays close: Settled at a new all-time high at 2460.50 and .7% off of the session low.

Fundamentals: The S&P fought off global weakness early in the session mainly on two prospects; that President Trumps meeting with Yellen would go well and that his Tax Plan would see strides in getting passed. Both have come to fruition as of late yesterday and the S&P has set a new all-time high trading to 2571.75 on todays session. Though it is still very likely that Fed Chairwoman Janet Yellen will be on her way out, an insider in current Fed Governor Jerome Powell has now become the lead candidate. Not only would he satisfy both sides of the isle in Washington, he is supported by Treasury Secretary Mnuchin and ultimately provides the market with a clearer blueprint than John Taylor or Kevin Warsh; Powell, a close ally to Yellen has voted with her. To close out the week we have earnings from GE, Honeywell, Procter & Gamble and Schlumberger. Lets not forget that Yellen speaks tonight at 6:30 pm CT.

Technicals: The market tested and held first key support beautifully yesterday at 2439.25-2443. We discussed all week that the buyers must be patient after consecutive sessions of higher lows continued to mount, reaching seven on Wednesday. Price action is clearly out above resistance at the 2558.50-2562.25 level this morning but it will be key to watch on a closing basis. The new all-time high traded overnight and comes in at 2571.75. This poses first resistance but the level we are now eyeing more closely is 2581.75, the market should be able to extend gains into here before its next retreat.

Bias: Bullish/Neutral

Resistance 2571.75**, 2581.75**, 2595-2600**

Pivot - 2558.50-2562.25

Support 2439.25-2443**, 2507.75***

Crude Oil (December)

Yesterdays close: Crude settled yesterday below the 52.03 marker at 51.51.

Fundamentals: A wide range of fundamentals are working to move prices south. There is not one that truly stands out more than the other; an unenthusiastic weekly EIA report, Russia hinting to not want to extend Oil cuts, a negative article written about the Saudi Aramco IPO, OPECs panic jawboning, Chinas central bank governor warning of the economy becoming overheated. Price action began to stall last week before the disruption in northern Iraq and this still poses a threat as fighting continues. However, it has been about two months since the first of the weather threats hit the U.S and the focus is now shifting towards a weaker demand season as the November contract expired yesterday and falls off the board today. Furthermore, a focus and belief that producers are looking to make up for lost time ultimately opens the door for lower price action. Today is Friday and as we discussed, there is still some uncertainty looming in Iraq. We dont expect the market to fall apart today, but the bears should be ready to act Sunday night at the latest.

Technicals: Yesterdays session finished below the 52.03 marker giving a nod to the bears. This is the pivot level that we have been watching all week. Tests below here held support both on Tuesday and Wednesday before notching a close back above this level and this was the cause for us maintaining a Bullish/Neutral bias. The close below this level yesterday neutralized any bias and now the clear move below support has turned us Bearish/Neutral as we now favor positioning short. Trendline support from the August 31st low comes in today at 50.60 and aligns with the 200-day moving average at 50.71; this should keep price action in check on the session being Friday but a close below yesterdays low of 51.28 will clearly leave the door open for the bear camp heading into next week. Only a close at or back above 51.51-51.79 will work to neutralize this weakness.

Bias: Bearish/Neutral

Resistance 51.51-51.59**, 52.41**, 52.86**, 53.11***, 53.76*, 55.02***

Pivot 51.28

Support 50.51-51.79**, 49.97**, 49.44***, 48.62**

Gold (December)

Yesterdays close: Gold settled yesterdays session at 1290.

Fundamentals: The metal is back in the red this morning and seeing pressure on a stronger Dollar and rising yields after the Senate adopted a budget last night. This paves the way for President Trumps tax plan and has marched equity markets higher; safe haven buyers coming into Thursday morning are paring back positions. However, Gold should not be forgotten just yet. If we look at the key drivers of the metal this week, the failure of the recovery to hold 1300 relied quite a bit on speculation that a more hawkish outsider will take the helm of the Federal Reserve. This is now not the case as current Fed Governor and Yellen ally, Jerome Powell is now the clear front runner. We have Existing Home Sales data at 9:00 am CT and Yellen speaks at 6:30 pm CT tonight. Cleveland Fed President Mester speaks later today at 1:00 pm CT.

Technicals: The bulls notched a solid session yesterday; rejecting support and achieving a close at 1290, above the 1289.4 level which we referenced would neutralize the tape from bearish. This led to a swing high of 1292.9 before the news broke out of the Senate. Not only did the news hamper the metal, but second resistance was rejected. Price action is floundering at the moment and retesting key support that is now at 1277.6-1281.3; a move below here could easily open the door to major four-star support below within the next 24 hours of trading. The bulls must be nimble until a move back above 1289.4.

Bias: Bullish/Neutral

Resistance 1289.4**, 1293**, 1298.4-1302.7**, 1308.4-1312.6**, 1324.3**, 1341-1344.6***, 1362.4

Support 1277.6-1281.3**, 1262.8-1269***, 1243.6**

Natural Gas (December)

Yesterdays close: December Natural Gas reversed sharply yesterday to finish in the green at 3.086.

Fundamentals: Unseasonably warm weather has hampered the demand perception opening the door for lower price action. Yesterdays EIA inventory report showed an injection of 51 bcf vs 55 bcf expected. However, this slightly bullish headline did not shy the bears from selling early. The 10-day forecast shows cooler temperatures coming through the Midwest and falling back in line with the average on the east coast as well. We have seen unseasonable weakness in Natural Gas for the early part of October which can usually be seen as a favorable time. Contrary to popular belief, hurricanes can actually have a bearish impact on Natural Gas prices in many scenarios as demand weakens. However, there are many longer term bullish factors that make the market attractive down here. Storage remains below the five-year trend. The demand prospects are strong through the rest of the year and into the first quarter of next; this is potentially setting up as strong value area to buy on a fundamental basis.

Technicals: Yesterdays sharp reversal off of a double bottom in the December contract must be taken note by both the bears and the bulls as it should carry legs. Also standing out to us is how much sharper the November contract sold off before reversing. November, which is still the front month contract (and must be watched in conjunction with the December that we are favoring to trade) for another week, sold off to a low of 2.773. Major three-star support comes in at 2.753-2.7565 and the November contract rejected this level. However, a close below this level would open the door to major four-star support at 2.486-2.522. Focusing back on the December contract, it traded to a low of 3.012 yesterday as it retested its low of 3.013 from last week and this a major three-star support level that aligns with the December contracts low from November 2016. After rejecting this level it is back above 3.10 this morning, key resistance now comes in at 3.16-3.1825 and a close out above here should have legs.

Bias: Bullish

Resistance 3.16-3.1825**, 3.22**, 3.33-3.36***

Support 3.012-3.042***, 2.753-2.7565***, 2.486-2.522****

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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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