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Fed Day - Blue Line Morning Express

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E-mini S&P (June)

Yesterdays close:Settled at 2836.50, down 4.00

Fundamentals:Its Fed Day and the committee releases their policy statement and quarterly economic projections at 1:00 pm CT and Chair Powell will hold a press conference after at 1:30 pm CT. Beginning with the Tradable Events this Week, we have made it a point to emphasize the importance of todays Dot Plot. With the CMEs FedWatch Tool not pricing in a hike all year, the committee will be expected to echo this through their Dot Plot. Furthermore, they will be expected to firm up a timeline to finish unwinding their balance sheet this year; known as Quantitative Tightening or QT. The Federal Reserve is in the drivers seat, they are far and wide what matters most to this market. The fact that the CMEs FedWatch Tool has priced-in a zero probability the Fed hikes this year and a 26.7% chance they actually cut rates has fueled this historical run in equity markets. If they do not minimally confirm the high probability of no hikes this year AND the timeline to end QT, equity markets will likely take a swift kick to the gut.

The S&P and NQ furthered their breakout yesterday before mixed news on U.S and China trade encouraged a wave of profit taking and risk-reduction. Bloomberg first reported U.S officials are concerned China is taking offers off the table. Other outlets then reported U.S Treasury Secretary Mnuchin and U.S Trade Representative Lighthizer are traveling to China next week and a deal is in the final stages. Overall, this bit of uncertainty rattled what has been an unfazed risk-appetite. Not so much because of the U.S and China news but more-so as investors and traders alike looked to todays crucial Federal Reserve meeting as a reason to deleverage. However, let yesterday serve as a reminder that U.S and China trade is not as completely irrelevant as it has felt since they delayed a Trump-Xi meeting.

Technicals:The S&P traded out to a high of 2858.75 shortly before the wave of mixed news. The slight U-turn has been met by major three-star support at ...Please sign up for a Free Trial at Blue Line Futures to view our entire technical outlook and proprietary bias and levels.

Crude Oil (May)

Yesterdays close:Settled at 59.29, down 0.09

Fundamentals:Crude Oil is slightly lower this morning and about a dollar from yesterdays high of 59.86. Broader risk-sentiment is coming in just a bit ahead of todays FOMC Meeting and this can be seen in a few sectors. In fact, a bullish private survey from API yesterday after the bell could not really excite Crude bulls at this level. They reported -2.133 mb Crude, -2.794 mb Gasoline, -1.607 mb Distillates and -0.317 at Cushing. Expectations for today are at +0.309 mb Crude, -2.414 mb Gasoline and -1.094 mb Distillates. Overall, yesterdays API has set a bullish bar that the market could not react to, if the data is closer to the EIA expectations, we imagine Crude will trade lower. As the afternoon develops with the Fed, traders must keep an eye on that broader risk-environment.

Technicals:We have been vocally Neutral in Crude after our upside resistance of 59.63 was achieved. Given yesterdays direct test and failure at $60, we are now cautiously ...Please sign up for a Free Trial at Blue Line Futures to view our entire technical outlook and proprietary bias and levels.

Gold (April)

Yesterdays close:Settled at 1306.5, up 5.0

Fundamentals:Gold is consolidating above the psychological $1300 mark as we look to todays FOMC Meeting. They release their policy statement and economic projections at 1:00 pm CT and we have emphasized the importance of todays Dot Plot. Fed Chair Powell follows with his press conference at 1:30 pm CT. They must echo little to no probability of a hike this year and firm-up their plans to finish unwinding their balance sheet. If this is merely confirmed, it should send Gold and Treasuries higher and the Dollar lower. Dont hesitate to contact our trade desk as the session develops to get our take 312-278-0500

Technicals:Gold poked its head out above major three-star resistance at ...Please sign up for a Free Trial at Blue Line Futures to view our entire technical outlook and proprietary bias and levels.

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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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