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Our Full Report - Blue Line Morning Express

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Morning Express

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E-mini S&P (December)

Last weeks close:Settled at 3146, up 28.25 on Friday and up 2.25 on the week

Fundamentals:Novembers Nonfarm Payroll report on Friday was strong and sent the S&P within a hair of a fresh record. Job growth well exceeding expectations at 266,000 versus 186,000 and Octobers read was revised from 128,000 to 156,000. Wage growth was also steady with a MoM gain of 0.2%, but it was the revision higher for October from 0.2% to 0.4% that set the annualized better than expected at 3.1% versus 3.0%. All in all, this is very favorable for the U.S consumer who has been the leader of the economy and certainly explains Fridays strength.

Both the Federal Reserve and U.S-China trade are front and center this week. The Fed meets Wednesday and the odds are essentially flat that they will leave rates unchanged. What matters most is their rhetoric and any glimpse of their future plans; there is currently a 20% probability they cut rates by 25 basis points by March. As for U.S-China trade, all seems steady in the headlines but the deadline to implement fresh tariffs on December 15th is quickly approaching. Remember, as we discussed last week, the legislations behind the scenes is of the utmost importance and could be a deciding factor for progress.

Technicals:Price action is settling in a bit from Fridays roaring session. Those highs set Friday align with other indicators to bring first key resistance and above there comes resistance associated with the records. It is not abnormal to see price action settle in or even retreat on Monday after such a strong Nonfarm Payroll Friday and especially so with such fundamental land mines lingering as the Fed and trade. The higher intraday open post-Nonfarm Payroll brings major three-star support at 3117.75-3119.75 in the S&P and 8309.25-8320.75. We would expect a buy opportunity swing trade upon the first test to this level but are cautious at current levels.

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Bias: Neutral

Resistance: 3149.50-3151**, 3158*, 3165-3180***

Pivot: 3146

Support: 3131.75-3132.50**, 3117.75-3119.75***, 3110.25*, 3100.50-3103.25**, 3088.50-3091***, 3063-3069.50**, 3032.25-3042.25****

NQ (December)

Resistance: 8400-8415**, 8453-8458.75**, 8500-8527***

Pivot: 8385

Support: 8356.75**, 8309.25-8320.75***, 8255-8262.50**, 8161.25-8168.25***

Crude Oil (January)

Last weeks close:Settled at 59.20, up 0.77 on Friday and up 4.03 on the week

Fundamentals:Buy the rumor, sell the news; we believe last weeks OPECs meeting and Saudi Aramcos IPO pricing drove Crude Oil higher and now that they are in the rearview mirror, we believe prices should come in. Yes, OPEC+ added a 500,000-bpd headline cut but there are many questions associated with not only how it will be implemented but the overall compliance. Saudi Arabia was already producing 400,000 bpd below its quota, furthermore, Russia will receive exemptions. For now, it would seem the headline cut will pave the way to alleviating a surplus in the first quarter. A trade deal would also help support the market within that time frame. However, we did not get many answers last week and are likely to face mounting uncertainties through Q2 and Q3. While we find fundamental value in fading this rally, last weeks EIA inventory report was supportive and another such report this week will keep prices very elevated.

Technicals:On Friday, we introduced a slight Bullish Bias, focusing on the momentum side of things. Price action traded to a session high of 59.85 before retreating. We have now Neutralized this Bias and feel strongly that our new major three-star resistance at 59.85-60.45 is now a ceiling. Although a close above here is bullish, we see value in fading rallies to here until such. To the downside, the lines in the sand are there. First, major three-star support at 58.00 and then below the 200-day moving averages floor at 57.30-57.56. A close below these waves of support will ignite the downside.

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Resistance: 58.93-59.20**, 59.85-60.45***

Support: 58.00***, 57.30-57.56***, 56.86*, 56.10-56.15**, 54.72-55.17***

Gold (February)

Last weeks close:Settled at 1465.1, down 18.00 on Friday and down 7.6 on the week

Fundamentals:Fridays blowout November Nonfarm Payroll report, yes blowout especially considering Octobers revisions, sent Gold back near the lows of the week. Todays calendar is quieter, and the metal has been able to consolidate, but if equities are bid into Wednesdays Fed meeting Gold will continue to see slight pressure at a minimum. Still, the odds of action on Wednesday are flat and the Fed is expected to cut 25 basis points by March with a 20% probability. What matters most in the near-term for the metal as it unwinds a seasonally bearish time of year is the Feds forward outlook. U.S and China trade is also in the crosshairs with a deadline to increase tariffs quickly approaching December 15th and this could be a huge risk-off catalyst boosting Gold.

Technicals:Fridays settlement is our pivot today and aligns with our momentum indicator, continued price action below here will leave Gold vulnerable to a direct test to 1453.1-1454. However, if Gold can regain previous support, now resistance, at 1469.2-1472.7 and settle out above here, it will begin to neutralize Fridays weakness.

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Resistance: 1469.2-1472.7**, 1484.9-1486***, 1500**

Pivot 1465.1-1466.8

Support: 1459.8*, 1453.1-1454***

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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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