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Today's Playbook - Blue Line Morning Express


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E-mini S&P (March)

Yesterdays close:Settled at 3319.75, up 0.25

Fundamentals:U.S benchmarks remain stable, but off fresh record highs achieved yesterday. Dominating the headlines today are the Coronavirus, the ECBs policy meeting, earnings, Davos and of course the impeachment of President Trump.

China announced the lockdown of a third city in an attempt to control the outbreak of Coronavirus, there are now more than 600 confirmed cases. Transportation has been shut down in and out of Wuhan, the origin of the outbreak, Huanggang and now Ezhou. With the start of the week-long Lunar New Year approaching, the country is making its best effort to contain the virus from spreading as hundreds of millions are expected to travel.

The ECB left rates and bond purchases unchanged this morning as expected. However, investors and traders alike are awaiting ECB President Lagardes highly anticipated press conference at 7:30 am CT for details of the central banks first Strategic Review since 2003 and any signal of a roadmap to policy as the year unfolds. Many analysts expect a potential rate cut in September.

On the earnings front, Texas Instruments beat Q4 estimates after the bell yesterday and gave firm guidance. However, the stock is giving back half of yesterdays gains in the premarket. The Semiconductor sector surged higher along with the broader tech sector yesterday but finished softly, leaving a tail from new record levels. Airlines Southwest, JetBlue and American all report this morning. Proctor and Gamble is down about 2% and Comcast is up about 2%; each reported this morning. Intel will be closely watched after the bell.

U.S Commerce Secretary Wilbur Ross is making headlines this morning from Davos after following President Trumps narrative that the U.S and EU have some work to do on trade. The market does not seem too concerned about the threat of auto tariffs, but it is something to keep a pulse on. The impeachment of President Trump continues in Washington; we noted here yesterday that the market likes Trump and the surge higher Tuesday evening was in relief of a watered-down trial. If this is negated, markets will react.

Coming up is Initial Jobless Claims at 7:30 am CT, EIA inventory data at 10:00 am CT and KC Fed Manufacturing at 10:00 am CT. Crude Oil has lost more than 5% this week, the reaction to EIA data could prove pivotal to broader sentiment.

Technicals:Price action surged to new record highs yesterday in each the S&P and NQ before settling in ahead of the bell. The S&P traded to a high of 3337.50 and stalled at our major three-star resistance at 3336.50. The NQ traded to a high of 9254 and stalled ahead of our major three-star resistance at 9263.75. The settlement prices for each was below our pivots at 3325 and 9206.50 which were both viewed as crucial areas to hold on a closing basis in order to keep the immediate-term bullish momentum intact. In fact, the NQ has not settled above this level at all; it is now resistance on the session. First key resistance in the S&P comes in at 3319.50-3322 aligning our 3319.50 level with settlement and our momentum indicator. Each index must trade out above and hold above these first key resistance levels in order for the bulls to regain that immediate-term edge. Strong support sits below but as we have vocalized before, the market is overdue for a nice healthy pullback and there is unfinished business at ...Please sign up at Blue Line Future to have our entire technical outlook, actionable bias and proprietary levels emailed to you each morning.

Crude Oil (March)

Yesterdays close:Settled at 56.74, down 1.64

Fundamentals:Crude Oil lost 2.8% yesterday. With losses extending into this morning Crude, Gasoline and Heating Oil are each down at least 5% on the week. As we noted here yesterday morning, sentiment was getting bearish given mounting expectations for inventory builds on todays official EIA report coupled with fears of the Coronavirus hitting Chinese demand. Last nights private API survey confirmed some of these expectations showing +1.57 mb of Crude compared to official estimates for a -1 mb. API also showed +4.5 mb Gasoline and +3.5 mb Distillates, both larger than estimates of +3.090 mb Gasoline and +1.014 mb Distillates. China has now locked down their third city and there are reports of the virus now in Singapore; this narrative is weighing commodities.

Technicals:Price action sliced through major three-star support at 57.36-57.42, a level that had previously buoyed the tape and then held major three-star support at 55.82-56.25 into settlement. We are now well below here today and the next most viable level of major three-star support is ...Please sign up at Blue Line Future to have our entire technical outlook, actionable bias and proprietary levels emailed to you each morning.

Gold (February)

Yesterdays close:Settled at 1556.7, down 1.2

Fundamentals:Gold is holding ground within what has become a defined technical range between strong overhead resistance and budding support. The Dollar is strengthening on stronger than expected Initial Jobless Claims and comments coming out of the ECB President Lagardes press conference as the central bank looks to Strategic Review. However, Gold seems to be ignoring the currency situation and firming back near session highs as equity markets and commodity prices are taking a hit due to mounting fears of the spread of the Coronavirus. Safe-haven assets such as Gold, Treasuries and the Yen are capitalizing on the wave this morning. Traders due want to keep an eye on KC Manufacturing due at 10:00 am CT and the development of President Trumps impeachment trial.

Technicals:Gold has remained confined by strong overhead resistance aligning with the highs from August at 1565.8-1571.7, but support at the 1546.5-1547.6 has defended waves of selling; ultimately, setting up a constructive tape. Traders should not ignore the move in the U.S 30yr Bond which is chewing through a strong area of technical resistance, one that could help fuel the metal. Our momentum indicator comes in at ...Please sign up at Blue Line Future to have our entire technical outlook, actionable bias and proprietary levels emailed to you each morning.


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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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