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Today's Playbook - Blue Line Morning Express

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E-mini S&P (September)

Yesterdays close:Settled at 3002, up 23.50

Fundamentals:Padding a stellar session yesterday, U.S benchmarks surged into the close and extended gains overnight to a high of 3020.In the Midday Market Minute, we pointed to the likeliness of our upside target at 3004 being achieved into settlement and at the least ahead of todays ECB policy announcement.Fueling yesterdays strength was broadly good leadership; Apple, AT&T and Boeing all gained more than 3%. Behemoths Google and Facebook along with healthcare all pulled their weight and this comes on the heels of a strong performance in the first half of the week from the banking sector. We discussed here yesterday that National Security Advisor Bolton getting pushed out of the White House secured a low on Tuesday and reinvigorated the immediate-term uptrend from what was becoming a consolidation pattern as traders and investors alike reduced risk after a great run and ahead of todays ECB policy meeting and U.S CPI data. We are already seeing the impact of his exit on dealings with both China and Iran. Last night, President Trump tweeted he will delay raising the tariffs on $250 billion worth of Chinese goods from 25% to 30% set to start October 1st for two weeks until October 15th as a gesture of good will partly because the Peoples Republic of China is celebrating their 70th anniversary on October 1st. With the S&P contained by our 3004 upside target, the news at 6:00 pm CT boosted it from 3001.50 to 3020 in less than 15 minutes. As for Iran, it was revealed yesterday afternoon that prompting Boltons exit was the fact President Trump was considering easing sanctions on Iran. This has weighed on the price of Crude Oil despite a bullish EIA inventory report yesterday.

In a cancelled CNBC Closing Bell spot due to time constraints on the show yesterday. Bill Baruch had two trades queued up. The first, on the 30-year Bond; after achieving the downside target of 160 for shorts discussed on Mondays show, we are setting a target of 158 to go long. Although this is a bit away, it is crucial to be prepared amidst the volatility expected through next week. The second, on Crude Oil and ExxonMobil to be discussed in the Crude Oil section of todays report.

The ECB, as expected announced a 10-basis point cut and the plan to restart bond purchases at the pace of 20 billion per month beginning November 1st while also introducing a two-tiered system for banks to avoid paying a negative rate on excess liquidity. They slashed the deposit rate deeper into the negative at -0.50%. This is what markets were hoping to see and the immediate reaction has sent stocks and Gold higher while depressing the Euro and yields.

Dont forget, the day is just getting started. The real fireworks begin at 7:30 am CT when ECB President Mario Draghi takes stage for his always lively post-meeting press conference and the release of U.S CPI data. With next weeks Fed meeting in the crosshairs, things are just getting interesting. There is currently only a 11.2% probability they leave rates unchanged.

Technicals:Price action was as constructive as it could be yesterday; with a higher tape at the opening bell, both the S&P and NQ pulled back just slightly enough to ping our pivot and major three-star support respectively. This was the exact path we described here and one we noted would lead to higher prices, such that our 3004 upside target to get filled. We have broadly kept a more Neutral Bias, although agreeing with the fact that stocks are riding a breakout from a more intermediary consolidation pattern. This is something that you cannot fight and instead want to ride so as long as our landscape continues to play out properly. At the same time, you must be vigilant hour to hour and day to day in this headline driven atmosphere. For now, the S&P nearly tagged major three-star resistance overnight that aligns with the record high and this will act as a headwind. Above here, we have an old level at ...Please sign up for a Free Trial at Blue Line Futures to view our entire technical outlook and actionable bias and levels.

Crude Oil (October)

Yesterdays close:Settled at 55.75, down 1.65

Fundamentals:Crude Oil is sharply off Tuesdays high of 58.76, a failure at major three-star resistance. Despite a bullish EIA inventory report yesterday, price action dissipated due to the impact of a less hawkish White House after the departure of National Security Advisor Bolton. Furthermore, it was reported President Trump wants to ease sanctions on Iran and this prompted Boltons exit. Amid the potential policy shift which in and of itself has weighed on Crude Oil, the market is at the onset of a seasonally weaker time of year. Adding pressure this morning are reports that OPEC members at the JMMC meeting did not adjust the policy pact despite Russia, Iraq and Nigeria all overproducing in August. Furthermore, the IEA released an unfavorable report this morning saying that non-OPEC supply is ready to surge and the OPEC+ alliance could be the catalyst that pushes the world back into oversupply.

The path of least resistance for Crude Oil is now fundamentally lower. Click here to see two charts, one on Crude and one on ExxonMobil. Exxon has set lower lows this year. We believe both are in store for lower prices technically and fundamentally.

Technicals:Price action sliced through major three-star support at 56.45-56.52, a level that will now act as resistance and define what we believe to be a fresh downtrend. Given the long-dated consolidation, we have two levels of major three-star support. The first comes in at ...Please sign up for a Free Trial at Blue Line Futures to view our entire technical outlook and actionable bias and levels.

Gold (December)

Yesterdays close:Settled at 1503.2, up 4.0

Fundamentals:Gold has built the exact landscape that we desired in our writings here this week; battling at the $1500 mark and enabling it to capitalize on a number of fundamental outcomes from todays ECB policy meeting and data. Overall, the ECB delivered what markets and Gold bulls had hoped for, more stimulus: a 10-basis point cut and the plan to restart bond purchases at the pace of 20 billion per month beginning November 1st while also introducing a two-tiered system for banks to avoid paying a negative rate on excess liquidity. As we type, ECB President Mario Draghis speech is getting underway and Gold is shaking off a stronger Core CPI read. The morning is just getting started.

Technicals:Gold quickly spiked through 1520.4 after the ECB announcement; holding this level is crucial through the end of the day and as we discussed it would fully neutralize the recent damage. Now, the tall task which it seems Gold would be able to fulfill is a close 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 actionable bias and levels.

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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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