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Today's Playbook - Blue Line Morning Express

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Morning Express

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E-mini S&P (December)

Yesterdays close: Settled at 3086, up 10.50

Fundamentals: U.S benchmarks settled in after yesterdays early exuberance and are sitting near unchanged ahead of Fridays opening bell. Chinas Foreign Ministry announced yesterday that the two sides would agree to rollback tariffs in phases upon signing an interim Phase One trade deal. The headlines sound very copasetic right? The only problem, the U.S had not confirmed this great news. We discussed here and with Bloomberg yesterday morning how this is Chinas Trade Shuffle, a bait and switch confidence game. Markets reacted positively to the headlines leaving the U.S reluctant to deny such, ramping up pressure for a favorable response. As the morning developed there were rumors of discontent and disagreement among key White House officials on rolling back tariffs. In the end, the White House confirmed this news, but it would seem only because they were backed into a corner.

Trade Balance data from China and Germany last night and this morning was much better than anticipated. In Chinas case, both Imports and Exports fell less than expected. As for Germany, the data showed steady gains for each Imports and Exports. Fed Governor Brainard speaks this morning at 7:30 am CT and at 9:00 we get a look at fresh November Michigan Consumer data. If this read beats expectations and the news cycle doesnt take a turn for the worse, we imagine equity markets are looking to finish the week on a healthy note.

Technicals: Yesterday was solid session but U.S benchmarks pulled back from fresh records to settle on a duller note; the S&P failed to achieve 3100 and the NQ failed to settle out above a rising trend line from April. Still, this has been an extremely constructive week and one where major three-star supports in each the S&P and NQ aligning multiple technical indicators with last Fridays gap settlement held. With record highs again achieved yesterday, there is no denying these markets are ... Please sign up for a Free Trial at Blue Line Futures to have our entire technical outlook, actionable bias and proprietary levels emailed to you each day.

Crude Oil (December)

Yesterdays close: Settled at 57.15, up 0.80

Fundamentals: Crude Oil followed the broader risk-environment higher into 11:00 am CT before paring gains. Rumors of disagreement among White House officials in rolling back tariffs threw cold water over Crude Oils tape more than other risk assets because its not comprise of 500 stocks with largely better than expected earnings. Remember, Wednesdays EIA data was overall bearish and at these elevated levels there is little value in betting that OPEC+ will raise production cuts at the December meeting regardless of what Saudi Arabia pushes for ahead of the Aramco IPO. Data overnight from China showed less of a drop in Imports and Exports than expected accompanied by record Crude Oil imports and a jump of 11.5% YoY.

Technicals: Crude Oil continues to struggle at the 200-day moving average which comes in today at 57.26-57.41 (continuous-daily). Price action traded out above there each day this week and hit a new swing high yesterday but has failed to settle above here on each attempt. The tape has not traded here today. Still, we remain Neutral near-term while Crude Oil continues to hold major three-star support at ... Please sign up for a Free Trial at Blue Line Futures to have our entire technical outlook, actionable bias and proprietary levels emailed to you each day.

Gold (December)

Yesterdays close: Settled at 1466.4, down 26.7

Fundamentals: Gold got smoked yesterday, plain and simple. Its been a tough week for the metal on the heels of last Fridays better Nonfarm Payroll, a strong ISM Non-Manufacturing on Tuesday, positive trade headlines and with U.S equity markets setting fresh records on a daily basis. But this is the washout we have been waiting for and one that we believe brings a tremendous seasonal buying opportunity. We noted earlier in the week that the Commitment of Traders net-long position is holding at the highest level in two years and this would cause sharp waves of selling as the crowded trade gets liquidated. Bill Baruch joined Bloomberg yesterday to discuss how a washout in Gold and Treasuries will present a great buying opportunity if one is patient. Fed Governor Brainard speaks at 7:30 am CT and at 9:00, we get fresh November Michigan Consumer data.

Technicals:Losses are extending into an area of support that we find attractive as long as a trader can withstand continued volatility and is prepared to see a test to major three-star support at 1413.2 at minimum. We expect the landscape to remain volatile after a break to the lowest level since the August 5th surge and breakout. For this reason, there a number of ways to play Gold over the intermediate and long-term with defined risk and prepare for seasonal bullishness around the corner. In fact, our Trade Alerts program, a fully executed limited risk options strategy got filled in Gold positions over the last 24 hours.

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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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