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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: Finished down 2 ticks at 2586.75

Fundamentals: Equity markets began to slip from record highs yesterday afternoon as President Trumps Asian trip heated. Heading into today investors should be concerned with a potential slowdown of tax-reform; it is said that Senate Republican Leaders were considering holding cuts back one year. We must not forget that much of the last couple innings in this stock market bull rally are on prospects that tax-reform will get passed before the end of the year; though a delay might not hit the market before the end of the year, we could see a mass exodus in January. Geopolitical tensions are also on the rise after President Trump spoke in South Korea and targeted North Korea in some of his toughest language yet, calling for unification by denying them any form of support, supply or acceptance. He arrived in China today. The FANG Index on ICE launches today and when we see this at such a late stage in a bull market we must ask ourselves is it arriving late to the party?

Technicals: Price action traded to a low of 2579.75 and has battled against first support at 2581.75. We will still watch this level on a closing basis and the bulls want to keep it marked above here in order to remain in the immediate-term drivers seat. However, there are two levels we are watching below here, the first is a trend line from the 2541.50 level and is rising but comes in this morning at 2576.50. This level will align with 2581.75 by the end of the session and if it holds will give the bulls an edge into tomorrow. Below here is another key support level at 2573.50 and price action must remain above here in order to keep its near-term uptrend; a close below here will likely open the door to further selling.

Bias: Bullish/Neutral

Resistance 2596-2600**, 2616**

Support 2581.75**, 2576.50**, 2573.50**, 2567.50*, 2561.25-2562.25**, 2553.75*, 2539.25-2543***

Crude Oil (December)

Yesterdays close: Settled down 15 cents at 57.20

Fundamentals: Oil grinded lower through much of a quiet session yesterday after extending to a new high of 57.69 overnight. It came under pressure after the API released their report at 3:30 pm CT and did not show as big of a build as expected coming in at -1.562 mb. Gasoline built about half a million barrels when expectations were for -2.25 mb though Distillates declined 3.133 mb against expectations of -1.8 mb. Chinese Trade Balance data last night showed that imports fell to a one year low and this has kept prices under a little pressure coming into today. Still, caution around the Saudi situations is working to offset negativity. The official EIA report due today expects -2.876 mb Crude, -1.372 mb Distillates and -1.938 mb Gasoline. Production data will be key but imports and exports which respectively set all times lows and highs on last weeks data will be just as important.

Technicals: Price action is testing into first key support at 56.51-56.79 and if you have capitalized on this run it is prudent to take something off table ahead of inventories if you have not already ahead of yesterdays API. Our upside target is still 58.97 but we are traders, but this is just simple risk management.

Bias: Bullish

Resistance 58.97***

Support 56.51-56.79**, 56.18*, 55.02-55.25***, 54.45-54.54**, 53.76-53.90**, 52.86-53.11***

Gold (December)

Yesterdays close: Gold lost almost $6 and settled at 1275.8

Fundamentals: The Dollar was strong to start the session and better than expected JOLTs put pressure on the metal. However, President Trumps Asian trip heated up with when he spoke in South Korea parliament and made some of his toughest comments against North Korea yet and asked for unity against them. Tax-reform has also seemingly hit a road block as Senate Republicans might delay implementation one year. And before you know it Gold was revived from an extremely disappointing session, one that came on the heels of a great start to the week.

Technicals: We remain long term bullish as Gold builds a very constructive pattern above major four-star support, however, we still must see the catalyst that gets this thing above 1291.3-1292.9 to force short covering and spark a run through 1300. The Dollar Index stuck its head above the 95 mark but has shown signs of fizzling, this would be a great catalyst. First, we must see Gold regain resistance at the 1280.5-1281.6 level to neutralize yesterdays weakness.

Bias: Bullish

Resistance 1280.5-1281.6**, 1291.3-1292.9**, 1298.4-1300**, 1308.4-1312.6**

Support 1262.8-1269***, 1243.6**

Natural Gas (December)

Yesterdays close: Settled at 3.152

Fundamentals: Storage estimates this week show a build of 8 bcf. We still believe that winter forecasts are too moderate and underestimate its potential. If tomorrows number proves to be correct or even below here, this would be a strong catalyst to buy as this should be the last week that inventories build.

Technicals: Price action is running into major three-star resistance at 3.179-3.198 and traded to a swing high of 3.176 yesterday. Also to note is the 100 day moving average comes in at 3.161. The 50 day moving average comes in just below here at 3.133 and for the December contract the 50 has not traded above the 100 since June. We would not be surprised to see a little profit taking ahead of tomorrows data but believe the bulls are ultimately in the drivers seat for this one.

Bias: Bullish

Resistance 3.179-3.198***, 3.22**, 3.30-3.36***

Support 3.103*, 3.033-3.05**, 2.984-2.998***, 2.847-2.861**, 2.753-2.7565***, 2.486-2.522****

10-Year (December)

Yesterdays close: Settled at 125135

Fundamentals: While other safe-haven assets began to see pressure early yesterday, the 10-year stayed steady. Still the market is stalling below resistance but a reinvigorated geopolitical premium after Trumps address in South Korean parliament directed at North Korea and a building wall of worry around tax-reform the 10-year bulls have a slight edge.

Technicals: We remain long term bullish though staying nimble for now is the more prudent trade. With downward pressure each of the last two years in December following a rate hike, patience for the bull camp should prove to be a smart play. First major resistance comes in at 12519 and this has proved to be a tough level to crack. However, the 50 and 100 day moving averages come in between first and second resistance and build a strong and tough pocket between first and second resistance, trade accordingly.

Bias: Bullish/Neutral

Resistance 12519**, 125255**, 12601**, 12615***

Support 12502-125035**, 12419**, 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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