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Crude set to extend its rally


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E-mini S&P (December)

Yesterdays close: Finished yesterday at 2585

Fundamentals: Equity markets traded higher yesterday as the House expectedly passed a bill on tax-reform. The real hurdle remains the Senate whose own bill seems to have lackluster support and where a Republican majority is tighter. Now though, nothing more is expected to be accomplished until after the Thanksgiving holiday. The Mueller investigation is back after news that President Trumps campaign is subpoenaed. Globally, European equity markets are working off session lows following downgrades and the Nikkei is in the green though the futures are down nearly .7% after finishing strongly with U.S stocks yesterday. Mario Draghi spoke this morning and was upbeat on the economy and wage growth. We dont want to underestimate what the strong read on Industrial Production brought yesterday. Building Permits and Housing Starts are due this morning at 7:30 am CT.

Technicals: Price action traded to a high of 2589.50 but ultimately failed to settle out above 2585.75 which hurt the bullish turn of momentum in the second half of yesterdays session. Overhead resistance also comes in at the all-time high and 2596; a close out above here on the week could ultimately spark a new bull leg to 2633. However, the bears are working to keep price action depressed below first key resistance and a close below support at 2576.50 will open the door for them once again.

Bias:Neutral/Bullish

Resistance 2585.75**. 2594.50-2596**, 2600*, 2616**, 2633***

Support 2576.50**, 2561.75-2562.25**, 2555*, 2539.25-2543***, 2525.50**, 2504.24-2507.75****

Crude Oil (December)

Yesterdays close: Settled at 55.35

Fundamentals: Crude Oil is trading up about 1.5% this morning as it recovers from a big week of profit taking and repositioning; option expiration, a bearish IEA relative to OPEC and small doubts about the November 30th extension have all put pressure on prices this week. The tape is higher as it attempts to bottom once again late in Thursday and early into Friday. The December contract becomes untradable on Monday and we expect continued repositioning to give the bulls an edge.

Technicals: Price action is working on the third session in a row with a higher low after beautifully holding major three-star support at 55.00-55.25. We are right up against first minor resistance and a move out above first key resistance at 56.57-56.94 would reignite a melt-up that could go for another $1 before testing recent highs. Our target remains 58.97.

Bias:Bullish

Resistance 56.19*, 56.57-56.94**, 57.92-58.14**, 58.97***

Support 55.83*, 55.00-55.25***, 54.36-54.65**, 53.96**, 53.11-53.27***

Gold (December)

Yesterdays close: Settled yesterday near unchanged at 1278.2

Fundamentals: Gold held ground well through yesterday despite a stronger Dollar on much better than expected Industrial Production data and the House passing their version of the tax-reform bill. Today, the Dollar is lower as the Mueller investigation is back in the news on President Trumps campaign being subpoenaed. The Dollar will now have to shift its focus to tax-reform in the Senate where Republicans have a tighter majority and lackluster support for their bill. Building Permits and Housing Starts are due at 7:30 am CT.

Technicals: The metal remains extremely constructive and the whole complex is starting the session out well. Price action is hugging the 100-day moving average at 1282.6 and we must see a close above here at a minimum. Still, 1291.3-1292.9 is the near-term line in the sand and a close out above here is needed to squeeze shorts. We are also watching the 200-day moving average in Silver that comes in at 17.29; swing highs have failed to get out above here. On the Midday Market Minute yesterday, we discussed how a move for Gold above 1291.3-1292.9 combines with a move in Silver above 17.29 should spark a bullish leg higher. Also, we noted yesterday that we will reevaluate major four-star support after the close of this week as the rising 200-day moving average has widened the pocket.

Bias: Bullish

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

Pivot - 1280.5-1282.6

Support 1262.8-1271.4***, 1243.6*

Natural Gas (December)

Yesterdays close: Settled at 3.053

Fundamentals: Natural Gas settled at the lowest level in two weeks at 3.053 but never traded lower than its 3.046. Price action did not give the bulls what they could have hoped for on the start of the storage draw season as the data came in greater than expectations at -18 bcf. Ultimately this starts the season earlier than the five-year average which comes in at +12 bcf. Though price action did not reflect this read, we are starting to get some positive momentum into this morning and ahead of the weekend.

Technicals: The market is moving off key support at the top side of the gap at 3.035-3.051; the only reason this level is not three stars is because the one below that covers that gap at 2.984-2.998 acts as the line in the sand. We would like to see a close above 3.117 to signal that the market is out of its recent consolidation lower and ready to begin heading north. The 50-day moving average also comes in at 3.124.

Bias:Bullish

Resistance 3.117**, 3.154-3.175**, 3.198-3.22***, 3.288*, 3.353***, 3.55**, 3.67**

Support 3.035-3.051**, 2.984-2.998***, 2.847-2.861**, 2.753-2.7565***, 2.486-2.522****

10-year (December)

Yesterdays close: Settled at 124275

Fundamentals: Equity markets turned higher early yesterday and saw further support from strong Industrial Production data and the House passing their version of the tax-reform bill. All of this put pressure on the 10-year from its recovery swing high on the week. We have Building Permits and Housing Starts at 7:30 am CT as traders look for a quiet second half of todays session ahead of the weekend.

Technicals: Price action failed to hold the 12431-125015 level and as we discussed yesterday key support at 12416-12419 is now in play to finish out the week. However, a low of 124245 is holding. We are looking for more of a consolidation barring a large deviation on todays data.

Bias:Neutral/Bullish

Resistance 12431-125015**, 12507*, 12519**, 125255**, 12601**, 12615***

Support 12419**, 12400**, 12222-12229***

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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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