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

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E-mini S&P (December)

Yesterdays close: The S&P settled yesterday at 2561.50

Fundamentals: Futures are pointing higher this morning with the S&P +.25% and the NQ +.5% on the heels of earnings from Amazon, Alphabet, Intel and Microsoft; all of which are up more than 3% this morning with Amazon +7%. The Euro has lost about 1.5% since yesterdays ECB taper and this combined with strong earnings and the House passing the budget yesterday afternoon as global equity markets on a tear to close out the week. Nikkei futures are up almost 1% while the DAX is up .75%. A weaker Euro supports European equity markets because it is favorable for trade, especially at current levels. We have a big slate of earnings to close out the week that includes Exxon, Chevron, Phillip66, Merck, AbbVie and others. The first look at US Q3 GDP is due at 7:30 am CT and will likely show a slowing economy due to hurricanes; expectations are at 2.5%. It is followed by Michigan Consumer Sentiment data at 9:00 am CT. The decision for the next head chair is seemingly down to current Fed Governor Jerome Powell and the potentially more hawkish Stanford Economist John Taylor; we should hear an announcement sometime over the next week.

Technicals: Price action recovered well from Wednesdays session and consolidated between the 2559.25-2563.50 level through all of yesterday. The tape became more favorable around 9:00 pm CT and has since stayed elevated. We first must not forget that 2569.50-2570.50 was a level that the market could not move out above earlier in the week. Bulls a little more on the aggressive side can now look to buy against first support at 2562-2563.50. We have now broken out second support at 2555.50-2558.50; a close below here will signal a potential failure and open the door for the market to dig back into the key 2439.25-2443 level. Longs want to see a close out above 2569.50-2570.50 on the session to hold through the weekend.

Bias: Neutral/Bullish

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

Support 2562-2563.50**, 2555.50-2558.50**, 2552*, 2439.25-2443**, 2507.75***

Crude Oil (December)

Yesterdays close: Crude finished up 46 cents at 52.64, the highest level since April 18th.

Fundamentals: The market elevated on comments from the Saudi Crown-Prince that We are committed to work with all producers and we will support anything to stabilize the oil demand and supply. Comments from Saudi Arabia and Russia this week have been very supportive, reinvigorating buying at critical times. Baker Hughes rig count data is due at noon CT and we have seen a drop for three weeks in a row.

Technicals: Price action settled at the highest level since the spring and traded to a high of 52.86 yesterday, testing the exact upper band of our major resistance level. We have now seen a lower high on todays session coming in at 52.82. We maintain that a close out above here is bullish but truly the market needs to close out above 53.11; doing so could encourage a move the $55 mark in a hurry. The bears look to keep a weekly close below the 52.41 area at a minimum to work to neutralize this strength. The 50 day moving average continues to rise and is now at 50.42 while the 200 dma is edging lower and comes at 50.61; a cross is bullish pattern. We will be keeping an eye on todays CME Commitment of Traders; as of last Fridays report the Managed Money longs held their largest position since August. The net long position was about 220,000 contracts and both of these figures point to an extended position. However, we want this spread to be above the ballpark range of 250-260k in order to show an over-extension and relate a potential sell opportunity. It is important to remember that this data is as of Tuesday and as long as prices stay elevated into the close we could assume that more longs were added. If everyone has bought, who is left to buy. Call our trade desk at 312-278-0500 if you want to discuss this, the energy products or anything commodities.

Bias: Neutral

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

Support 52.07**, 51.51-51.79*, 50.42-50.61**, 49.44***, 48.82**

Gold (December)

Yesterdays close: Settled down at 1269.6, the lowest level since August.

Fundamentals: The Dollar is pushing higher on Euro weakness as well as the House passing a the budget which paves the way for tax reform. Furthermore, the next Fed Chair is likely down to two candidates, current Fed Governor Jerome Powell and Stanford Economist John Taylor. Both of which are more hawkish than the current Chairwoman Janet Yellen. Powell remains the most likely candidate but Taylor has seen his odds become a little more favorable in the last 48 hours which has also added to the pressure in Gold. The first look at Q3 GDP is due at 7:30 am CT and is expected to weaken to 2.5% after the hurricanes; this will be a key mover for the metal. Michigan Consumer data is due at 9:00 am CT.

Technicals: Gold is trading right into major four-star support at 1262.8-1269 and this is exactly where the bulls want to find value, at key support, the 200-day moving average, the RSI nearing the lowest level since July and price action almost $100 from the yearly high. Traders must watch the Dollar though which has extended out above a key resistance level at 93.80-94.00 by almost 1%, the Dollar Index potentially has another 1% to go before testing a major trend changing level. Patient traders can wait to see price action bottom over the next week as we get through the more fundamental news and let all of the sellers sell. A close back into the 1277.6-1281 level will be crucial in neutralizing the weakness. A close below major four-star support can cause quick liquidation so buyers must use a stop.

Bias: Bullish/Neutral

Resistance 1277.6-1281**, 1286.9*, 1291-1292.9**, 1298.4-1302**, 1308.4-1312.6**

Support 1262.8-1269***, 1243.6**

Natural Gas (December)

Yesterdays close: Settled at 3.051

Fundamentals: Yesterdays inventory report showed a build of 64 bcf, just below expectations of 65 bcf. Mild weather has been a detriment to prices this week. Though demand remains strong on a long-term perspective and colder weather ahead is a very positive factor to look forward to, unsteady demand from week to week along with a supply that is building for the winter months is putting pressure on this market. Furthermore, the end of the month and the expiration of the November contract is putting a great deal of pressure on cash prices.

Technicals: Price action is now below major three-star support at 3.012-3.042. On a positive note, the November contract has not taken out last weeks low and remains well above the crucial long-term level at 2.753-2.765. We wrote early in the week that buyers on last weeks reversal needed to look to capitalize and/or exit and take profits after an unenthusiastic tape following Sundays gap higher. This is why it is important to manage the risk begin to prepare to step back in. As we have discussed our opinion has neutralized over the immediate term but remains long term bullish. We will watch 3.012 on a closing basis and only a settle back above 3.051-3.054 will neutralize this tape and potentially signal a buy.

Bias: Neutral/Bullish

Resistance 3.051-3.054**, 3.103**, 3.179-3.198***, 3.22**, 3.323-3.36***

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

10-Year (December)

Session close: Settled at 12412

Fundamentals: Yesterdays ECB policy statement has been coined a dovish taper, you wouldnt notice this in the US 10-year as prices remained suppressed at the lowest level since March. Yields in the 10-Year German Bund has confirmed this dovish taper talk as they have edged lower. However, we credit some of that price action to technicals with yields failing at the September highs and the Catalonia crisis. The US 10-Year remains under pressure after a disappointing 7-year auction yesterday. We have the first look at Q3 GDP at 7:30 am CT and Michigan Consumer data at 9:00 am CT. Pressure has been added due to speculation that we will see a more hawkish Fed chair announced in the coming days and ahead of next weeks Fed meeting. Now that we are in a hiking cycle, it is very common to see treasury selling ahead of a Fed meeting and a relief rally that begins in the ensuing 48 hours.

Technicals: Price action has held Wednesdays low by half a tick at 124065. Major support sits just below the market at 12400. Momentum is negative and the weekly RSI is at the lowest level since March. We will need to get through the next week of fundamental news before anyone who wants to sell would have sold and this could open the door to solid buy opportunity.

Bias: Neutral

Resistance 124235*, 125**, 125255**

Support 12400**, 12222 12229***

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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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