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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 yesterdays midday update you can watch it here: BlueLineFuture YouTube

E-mini S&P (December)

Yesterdays close: The S&P held first key support throughout the session and finished at 2568.25.

Fundamentals: Global equity markets have worked slightly higher into this morning as the big week unfolds. Chinese Manufacturing data came in soft last night. The Bank of Japan kept stimulus unchanged, but a dovish newcomer was likely supportive to the Nikkei. Eurozone GDP came in better than expected and the unemployment rate ticked down, however, inflation cooled with CPI missing the mark. Today is a big day for earnings with Pfizer, Mastercard, Kellogg, Aetna and many others before the bell. Anadarko and Devon Energy among others are after the bell. This morning we have Employment Cost Index at 7:30 am CT, Case Shiller at 8:00 and Consumer Confidence at 9:00 as we ready for tomorrows Fed meeting.

Technicals: Yesterdays trade was heavy after it failed to hold Fridays close of 2578.50 all of Sunday night, at the bell and on its retest at 9:30 am CT. This opened the door for the bear camp who could not quite take price action to first key support at 2561.25-2563.25, with a low of 2565.50. We establish these levels to set up our day and set boundaries for potential trades, these are always evolving and we encourage you to call us at 312-278-0500. We now have a higher low than yesterday and price action is above 2571.50. In our Midday Update yesterday, we said a move back above here will likely encourage a Fed drift into tomorrows meeting, well here we are.

Bias: Neutral/Bullish

Resistance 2581.75**, 2595-2600**

Pivot - 2571.50

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

Crude (December)

Yesterdays close: Crude settled above the $54 mark at 54.15 yesterday.

Fundamentals: Crude Oil is at the highest level since late February and has ultimately ignored weaker seasonals. OPEC is ready to extend cuts and the Brent contract is above $60 and at the highest level since the June 2015 breakdown. This move feels a little different and maybe that is because the longs are not showing up in an overexuberant fashion as they have before. Yes, the long position is clear and extended, however, we have not seen it truly widen as in the past. We will put a lot of emphasis on this Fridays Commitment of Traders report. Maybe this move feels a little different because though the Brent contract has been in backwardation for some time, the WTI contract now in total backwardation until March of 2022 (actually now further out than Brent according to yesterday settlements). This is a sign of tightening supply and a signal that OPEC and other producers have done their job. Also, another reason to think that one more year of cuts might do the trick. The question now is, to what extent will U.S Shale show up at these higher levels.

Technicals: Price action has been hanging well above Fridays closing mark and traded to a higher intraday low yesterday; holding the 53.76-53.90 level. Resistance at the rising trend line did its job as well and kept prices in check at 54.20-54.45 with a session high of 54.46. We now head into inventories and though the breakout is bullish to 55.02-55.25, we have now gone from Bullish to Bullish/Neutral as traders who have been long would be smart to take some dough off the table. We do want to add that the 50-day moving average at 50.68 has now officially crossed above the 200-dma at 50.60; a bullish Golden Cross. Another key technical aspect to watch is the developing head and shoulders pattern if we do not get above 55.25.

Bias: Bullish/Neutral

Resistance 54.20-54.45**, 55.02-55.25***

Pivot 53.76-53.90

Support 53.45**, 52.86-53.11***, 52.07**, 51.51-51.79*, 50.60-50.68**, 49.44***, 48.91**

Gold (December)

Yesterdays close: Gold settled yesterday at 1277.7

Fundamentals: The has pared losses into this morning and so have equity markets, especially in Japan. The Nikkei futures are +.7% but the actual Index gapped lower last night and is back to unchanged after the Bank of Japan meeting. Despite weaker than expected Chinese Manufacturing, the Shanghai Composite and Shenzhen are also putting in decent sessions after a weak start to the weak. This has kept Gold buyers in Asia at bay and so had potential Dollar strength ahead of data this morning; Employment Index is due at 7:30 am CT, Case Shiller at 8:00 and Consumer Confidence at 9:00. Look for these data points to help dictate todays Gold trade ahead of tomorrows Fed meeting.

Technicals: The metal traded to a high yesterday of 1279.9 and against first key resistance at 1280.3-1280.8. We remain long term bullish and do not believe the Dollar will trend higher for longer. However, we expect volatility to remain through the end of the week and encourage you to call our trade desk to discuss ways to play it; 312-278-0500.

Bias: Bullish/Neutral

Resistance 1274.3*, 1280.3-1280.8**, 1286.1*, 1291.3-1292.9**, 1298.4-1300.7**, 1308.4-1312.6**

Support 1262.8-1269***, 1243.6**

Natural Gas (December)

Yesterdays close: Settled yesterday at 2.966

Fundamentals: We are simply not getting the weather outlook to encourage imminent buying. Expectations for a cold winter have slowly dissipated but what does that mean? That bets become too one-sided. We do believe a cold winter is around the corner but in the near-term storage builds will keep the buyers at bay. Right now, we see a build in the ballpark of 60-75 bcf for Thursdays number.

Technicals: Price action failed to regain the 3.012 level yesterday with a high of 3.006 and a high in todays session of 3.005. We still have a bullish long-term outlook but a trade below the Sunday night open low of 2.961 will encourage further selling.

Bias: Neutral/Bullish

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

Support 2.961**, 2.753-2.7565***, 2.486-2.522****

10-Year (December)

Yesterdays close: Settled at 125005

Fundamentals: Treasury prices gained in back to back sessions for the first time since October 13th. This was short covering that started Friday and ran into yesterday as traders awaited the news and charges on Special Council Muellers investigation. We expect prices to remain depressed into and through Wednesdays Fed meeting. There are a number of catalysts for a reversal that include poor economic data, an ill-received tax-reform bill Wednesday and if the market rolls over due to that being ill-received or poor earnings from both Facebook and Apple.

Technicals: Price action is staying in check at first resistance which is now moved to 12502-125035 with the first key level we are watching on the week coming in at 12519, a close above here is needed to potentially break running downtrend while a close above 125255 can begin to spark short covering.

Bias: Neutral

Resistance 12502-125035**, 12519**, 125255**, 12601**, 12615***

Support 12419**, 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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