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Blue Line Morning Express (Gold, Oil, Natural Gas, S&P, 10yr)

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Blue Line Express

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We update our research throughout the trading day so be sure to visit the research page on our site!

If you missed our mid day market update yeserday you can watch it on our YouTube channel: 10.25.17 Mid day update

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E-mini S&P (December)

Yesterdays close: The S&P finished down less than .5% yesterday at 2558.50.

Fundamentals: The market lost more than 1% intraday yesterday after a string of disappointing earnings that began Tuesday night with Chipotle and AMD led into yesterday morning with the likes of Boeing and Freeport. Lets not forget that the last 3% or so in this market was due to the high probability of tax-reform getting through and this might not be as clear any more. Investors were quick to sell and take profits off the table early in the session, after support was reached losses were trimmed by more than half. Telecom and Industrials were the biggest losers on the session. This morning we have the ECB policy announcement due at 6:45 am CT and they are expected to taper their monthly bond purchases. Currently, their program to purchase 60 bn a month ends in December. Mario Draghi will follow up the announcement with a press conference at 7:30 am CT. A more hawkish than expected announcement would drive up the Euro and put pressure on the European equity market, which in turn would bleed through to the U.S. For more insight on todays ECB Meeting you can click this link to go to our FX Rundown from last night. Today is another big day of earnings and this morning we have Bristol Meyers, Comcast, ConocoPhillips, Time Warner and American Airlines to name a few. After the bell we have Amazon, Alphabet, Microsoft and Intel taking the headlines. Jobless Claims are due at 7:30 am CT and Pending Home Sales at 9:00. Traders must approach todays session as well as tomorrow with an ear to the ground. We also wait for any news on who will take or remain at the helm of the Fed as we lead into next weeks Fed meeting.

Technicals: Yesterdays price action again presented a tremendous buy opportunity and we followed up our call to stand pat and not to buy first support in the morning with a recommendation to take an action against the 2439.25-2443 level. With a great swing trade, the S&P managed to finish 17 points from its low of 2541.50. We are again standing pat this morning as we await the ECB announcement, earnings and furthermore because yesterdays close and the overnight price action was unable to regain the 2558.50-2562.25 level which has now been adjusted to 2559.25-2563.50. We will be watching this level on a closing basis today to look for an edge into the next trade. A failure to maintain a close above 2555.25 will leave the door open for the bears. There is now a pretty thick line drawn in the sand and a close below 2439.25-2443 would encourage another 1% selloff down to the 2507.75 level so traders must remain nimble.

Bias: Neutral

Resistance 2569.50-2570.50**, 2581.75**, 2595-2600**

Pivot 2559.25-2563.50

Support 2555.25**, 2550*, 2439.25-2443**, 2507.75***

Crude Oil (December)

Session close: Crude settled yesterday at 52.18

Fundamentals: Yesterdays EIA report was for the most part in line with expectations. Production bounced back above 9.5 mbpd. Much larger than expected drawdowns in Gasoline and Distillates were cushioned by the API report Tuesday night. We are watching the products closely and an unenthusiastic reaction yesterday could lead into quite the correction for Gasoline. On the global front, reports this morning show that flows through the Iraqi/Kurdish region to Turkey have dropped below 200,000 bpd. This is down from the 300,000-bpd reported on Monday. Prices so far this morning are holding the $52 mark very well.

Technicals: Price action tested first key support before the end of yesterdays session. In yesterdays Midday Update we discussed using the unenthusiastic EIA report and failure against resistance as an immediate term opportunity to sell. The immediate term view on this trade is now negated as price action has fallen into a consolidation pattern. However, the failure against resistance at the resistance level at 52.41-52.86 that we have referenced last week is clear. The bears have a chance to take it lower through todays session but we must remember the probabilities begin to favor the bulls after the clock strikes midnight tonight and ahead of the weekend (especially with Iraqi flows falling). Traders must keep an eye on the 50-day moving average that comes in now at 50.31 and is quickly approaching the 200-dma at 50.63; this is a bullish cross.

Bias: Neutral

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

Support 51.51-51.79*, 50.51-50.67**, 50.31**, 49.44***, 48.69**

Gold (December)

Session close: Gold finished yesterdays session at 1279 and still has not settled below the 1277.6-1281 level.

Fundamentals: Todays ECB meeting will directly impact Gold through the currency swings. To get more detailed insight on this meeting, please read our FX Rundown from last night. We expect Gold to be susceptible to Dollar weakness or strength in reaction the todays meeting. However, a much stronger Euro due to a more hawkish policy would open the door for a slight retreat in rally in the ensuing 24 hours. There are a lot of moving parts for the metal to close out the week as we also have Jobless Claims at 7:30 am CT, this is due when ECB President Mario Draghi is set to begin his press conference, and Pending Home Sales at 9:00 am CT. Traders also look ahead to tomorrows first read on Q3 GDP and next weeks Fed meeting. Lastly, lets not forget that President Trump could announce the next Fed chair any day.

Technicals: The bulls have continued to battle and though the tape has not reached four-star support, price action is exemplifying the strength in this level as buyers are stepping in before it gets there. Furthermore, we have not seen Gold settle below what has become a key level at 1277.6-1280.8. As a long-term bull, all we can ask for is price action to remain constructive. We believe the metals time to shine will come, whether that is a direct impact of the fundamental events about to take place or because of a technical rejection against our rare four-star level that results in a close back above 1291-1292.9 that encourages further buyers to step in.

Bias: Bullish/Neutral

Resistance 1286.9*, 1291-1292.9**, 1298.4-1302**, 1308.4-1312.6**

Pivot - 1277.6-1281

Support 1262.8-1269***, 1243.6**

Natural Gas (December)

Session close: Settled at 3.082, losing nearly 5 cents.

Fundamentals: Prices have been under pressure since the gap open Sunday night. Todays EIA report expects an injection of 65 bcf and this has been working its way through the market as the week has unfolded. Another large injection has certainly weighed on prices. Furthermore, the colder than average temperatures for much the country are going to get a little warmer over the 10-day forecast.

Technicals: We began advising late Monday and early Tuesday that the prudent thing is to take gains in this rally if you got them or roll up stops at a minimum. Our fear was exactly this after an unenthusiastic follow through on Sunday nights session even though support held early in the week. Price action will have to triple bottom now as it faces major three-star support once again at 3.012-3.0142. The November contract has all but fallen off the board and there is an encourage factor that pressure could be due to expiration and furthermore the November contract has clung to its gains form the lows a week ago much better as it trades between the 50% and .618 retracement support levels. We remain long term bullish and believe there is great value over the next 90 days at the $3 level. Short term swing traders may want to remain on the sidelines until we get more clarity from todays data.

Bias: Bullish

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

Support 3.105-3.127**, 3.056-3.074*, 3.012-3.042***, 2.753-2.7565***, 2.486-2.522****

10-year Treasury (December)

Session close: Settled at 124145

Fundamentals: All eyes are on the ECB this morning and we have seen steady selling pressure on the 10-year as rates have risen on many prospects with a more hawkish than expected ECB being one. Todays ECB meeting is only the first hurdle over the next week and our belief is that the sellers are selling ahead of this gauntlet that includes GDP tomorrow, a potential Fed chair nomination and next weeks Fed meeting. We do not believe rates will rise for longer. So, in turn we do believe that a strong buy opportunity could very well present itself once we get through the next week.

Technicals: Price action bottomed yesterday morning when we began to see selling pressure in equity markets. The low came in at 12406 and right at the lows from mid-March of this year and right in front of support at the 12400 level. The tape has strengthened into this morning but the volatility could be just getting started. In last weeks CME Commitment of Traders report we saw leveraged shorts take their most decisive position since June, one that was in relief from getting squeezed in April and into May. Our belief is everyone who wants to sell is selling and we should reach a point that no one is left to sell. However, we might have another couple weeks to go before we see positioning compete with last years and only lower price action would encourage such a move.

Resistance 124235*, 125**, 125255**

Support 12400**, 12222 12229

Blue Line Express

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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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