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

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E-mini S&P (December)

Last weeks close: The S&P finished the week trading to and closing at a new all-time high; 2580.75 and 2578.50. The NQ gained 2% with a decisive bullish breakout. Strong earnings from Amazon, Alphabet and Microsoft ignited the powerful weekly finish.

Fundamentals: We have seen a quieter start with traders exuding caution ahead of a big week. Adding to an already big week is a report that Special Counsel Robert Mueller will likely charge one or more people involved in the Russia Election Meddling Probe today, Monday. Global markets were quiet overnight with Spain outperforming after no further escalation over the weekend; Catalonia declared independence on Friday and the Madrid responded by imposing rule. The Fed is squarely in the picture this week with their policy statement due Wednesday and a replacement to Chairwoman Yellen likely being announced. We also get the first glimpse of a tax-reform bill Wednesday; read our Five Tradable Events this Week to dig deeper here. PCE, Personal Spending and Income data is due at 7:30 am CT this morning. Manufacturing data is due out of China along with the Bank of Japan meeting this evening. However, China is in the picture this morning for much more than their Manufacturing data later this evening. Hong Kong 10-year yields have reached a three-year high and major equity indices in the region are under the most pressure in more than two months; adding to the waves of caution moving through global markets ahead of this week. Case Shiller and Consumer Confidence are on the docket tomorrow and the ISMs and jobs will come into focus as the week develops. Facebook is set to deliver earnings Wednesday after the bell and Apple will follow suit Thursday.

Technicals: The S&P gained .66% and traded to a new all-time high of 2580.75 on Friday but has failed to trade in the green after reopening Sunday night and this has neutralized our bias. Arguably the biggest calendar week of the year has traders a little jittery, but we can also turn to our next major resistance target at 2581.75 being achieved as also exhausting the buyers and inviting selling. We must see the tape regain Fridays settlement of 2578.50 and a failure to do so will leave the door open for the bear camp.

Bias: Neutral

Resistance 2581.75**, 2595-2600**

Support 2571.50*, 2561.25-2563.25**, 2555.50**, 2439.25-2443***, 2507.75***

Crude Oil (December)

Last weeks close: Crude broke out above major three-star resistance at 53.11 and traded to a session high of 54.20 before settling at 53.90.

Fundamentals: A calming across global markets has kept the Crude rally in check heading into this morning. By the end of last week, it was clear that it is still a common goal between Saudi Arabia and Russia to reduce output in order to rebalance supply. The UAE followed suit announcing that it will comply with the global deal. Brent Crude Oil has achieved $60 on the news with the tradable January contract holding that benchmark into this morning.

Technicals: Price action is in a full breakout mode after achieving a weekly close above the major three-star level at 53.11. We now have a bullish bias but do want to see price action follow through and take out Fridays high of 54.20, todays session high comes in at 54.18. However, a rising trend line resistance from the August 1st high comes in at 54.45 today and will work to keep rallies in check. A failure to move out above here and a settle back below 53.45 will begin to neutralize our expectations. Major three-star support on this breakout now comes in at 52.86-53.11 and a close back below here will signal a failure. The 50-day moving average now comes in at 50.55 and is building to cross above the 200-dma at 50.61, a bullish golden-cross.

Bias: Bullish

Resistance 54.20-54.45**, 55.02***

Pivot 53.76-53.90

Support 53.45**, 52.86-53.11***, 52.07**, 51.51-51.79*, 50.55-50.61**, 49.44***, 48.91**

Gold (December)

Last weeks close: Gold is battling tough and after trading into our rare major four-star support at 1262.8-1269 with a low of 1263.8, the metal never achieved a settlement below 1269.6 and finished the week at 1271.8.

Fundamentals: Last week was a recipe of disaster for the metal with equity markets breaking out to new all-time highs, the Dollar Index trading to the highest level since July and the 10-year Treasury at the lowest level since March; strong earnings, a potentially more hawkish Fed along and tax-reform are all enemies of the metal. Still, Gold has held tremendously and last week did not make a new low on the month. Additionally, GDP data came in at 3.0%, better than the 2.5% expected on the heels of third quarter hurricanes. We talk about a pendulum of perception and it is beginning to swing too upbeat on the economy, growth and Washington. Inflation remains a key laggard and we get a look at that this morning with PCE, Personal Spending and Personal Income data at 7:30 am CT. If PCE falls short of expectations look for Gold to grind higher ahead of a jampacked week. Traders should also keep an ear to the ground on any news with the Mueller investigation, it is reported he will charge potentially two today, Monday; this could shake things up.

Technicals: What more can you ask for other than major four-star support holding. . . well, to continue to hold. With Fridays low coming in higher than the October 6th low, the door is open for the bull camp to begin the week. Equity markets are taking a breather and the caution flag is raised, it is go time for the metal. First minor resistance comes in at 1274.3 with the 1280.3-1280.8 level bringing more significance; a close above here will neutralize the weakness and invite buyers back into the party. However, all bets are off with a close below 1262.8-1269.

Bias: Bullish/Neutral

Resistance 1274.3*, 1280.3-1280.8**, 1286.1*, 1291.3-1292.9**, 1298.4-1301.1**, 1308.4-1312.6**

Support 1262.8-1269***, 1243.6**

Natural Gas (December)

Last weeks close: Natural Gas finished last week losing nearly 10 cents and finishing at the lowest level for the December contract this year at 2.964. The good news is the November contract fell off the board.

Fundamentals: Natural Gas was attacked on all sides last week, weather models over the next two to three weeks shifted warmer, U.S Energy Commission commented that Coal is more reliable than Natural Gas and the expiration of the weaker November contract. We still feel that Natural Gas is too cheap at these levels and has not priced in any upside risk.

Technicals: Price action has moved off the new overnight low of 2.936 and is trading in the green. We must start somewhere and this will be key to watch through todays session. Ultimately, we must see a close back above the 3.012 level to neutralize weakness in the near term.

Bias: Neutral/Bullish

Resistance 3.012***, 3.051-3.054**, 3.103**, 3.179-3.198***, 3.22**, 3.323-3.36***

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

10-Year (December)

Last weeks close: The 10-Year dug itself out of a double bottom low to finish the week at 12419 at the highest settlement since Tuesday. Still, this was the lowest settlement since the week of March 27th.

Fundamentals: On Friday traders began to price in potential Spanish risk over the weekend but more so ahead of this weeks gauntlet of activity. We have already referenced this week as potentially being the biggest of the year and now you can throw in Special Council Mueller potentially charging two persons today in the Russian Election Meddling Probe, reference our 5 Tradable Events this Week for more info on the Fed and tax reform. We do feel that the pendulum of positivity is reaching a climax and once we get through the Fed and a new chair appointment the door could very well be open for the bulls. Nonfarm Payroll is Friday and surrounded by ISM data. We have PCE this morning, a read on inflation along with Personal Spending and Income data. Tomorrow brings Case Shiller and Consumer Confidence.

Technicals: Price action moved well off a double bottom on Friday from Wednesdays low of 12406 which comes in front of key support at the 12400 level. The market has extended minor gains back above the 124235 level this morning and a close above 125 would be the next hurdle. There was no significant change in the Commitment of Traders on Fridays report

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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