• Bill Baruch

Morning Express

#ES, #NQ, #Crude, #Gold

E-mini S&P (March)

Yesterday’s close: Settled at 3316.50, up 22.75

Fundamentals: U.S benchmarks are higher by about 1% from Wednesday’s close. Is this latest surge the melt up stage? Maybe. Stronger than expected data from China last night and reports of fresh tax cuts have invigorated this leg. Is this last 1% all that surprising though? Or is this one ‘yuge’ pre-election masterplan? We have been talking about this for six months; President Trump wanted at least three rate cuts to offset the trade war and buoy economic conditions before using trade deals as a tailwind into the 2020 election. Now, reports of a new wave of tax cuts has gained traction since the idea was introduced by White House Economic Advisor Larry Kudlow late Wednesday. Furthermore, news that the U.S Treasury plans to issue 20-year bonds for the first time in more than three decades has lifted the long end of the curve which is viewed as a more normal and healthier sign compared to last year’s flat to inverted curve.


Last night, our favorite trio of Chinese data crushed expectations with Industrial Production again leading the way up 6.9% YoY versus 5.9%; this was the largest increase since March. Also, Fixed Asset Investment and Retails sales each beat expectations. Fourth quarter GDP data was nothing to write home about, but it did meet expectations at 6.0% YoY and 6.1% for 2019, avoiding the ugly ‘5’ handle.

From the U.S, we look a packed economic calendar that kicks off with Building Permits and Housing Starts at 7:30 am CT. Philadelphia Fed President Harker, a 2020 voter, speaks at 8:00 am CT. Industrial and Manufacturing Production are due at 8:15 am CT. Fresh January Michigan Consumer data is out at 9:00 am CT along with JOLTs Job Opening.


Technicals: Yesterday, price action in the S&P was flirting out above major three-star resistance at 3304.75 before ripping higher into the close and settling at our next key level of 3314.50-3316.75. For our complete technical outlook, actionable bias, and proprietary levels, sign up for a FREE two-week trial of Blue Line Express.


Crude Oil (March)

Yesterday’s close: Settled at 58.53, up 0.69

Fundamentals: Crude Oil is up on the session and seeing support from the broader risk-environment. One that has digested a U.S-China trade truce, healthy U.S data yesterday headlined by Philly Fed Manufacturing and strong Chinese data last night headlined by Industrial Production. In addition, although Middle East tensions have avoided the front-page news, they are still relevant and likely keeping a bid under the market from these lower levels. Traders should keep a pulse on the broader-sentiment, U.S data through today which includes Industrial Production at 8:15 am CT, January Michigan data at 9:00 am CT as well as Baker Hughes rig count at noon CT. Although U.S rigs slipped last week, Canadian rigs surged.


Technicals: As we noted yesterday, we expect relief rallies from major three-star support at 57.36-57.42, however, we do expect them to remain contained. For our complete technical outlook, actionable bias, and proprietary levels, sign up for a FREE two-week trial of Blue Line Express.


Gold (February)

Yesterday’s close: Settled at 1550.50, down 3.5

Fundamentals: Gold stuck its nose out above 1560 for a brief moment this morning before Housing Starts blew the doors off. The metal complex was ramping overnight on news of additional government spending; reintroducing the 20-year Bond and the potential unleashing of fresh tax cuts. Still, U.S Dollar strength over the last two weeks has weighed on the metal, not to mention continued equity market strength. However, not all currencies have lost ground against the U.S Dollar as the Chinese Yuan touched the strongest level since July. This has helped lift the metal complex that includes Platinum, Palladium and Copper; all set new swing highs this week. Philadelphia Fed President Harker, a 2020 voter, speaks at 8:00 am CT. Industrial and Manufacturing Production are due at 8:15 am CT. Fresh January Michigan Consumer data is out at 9:00 am CT along with JOLTs Job Opening.


Technicals: As we’ve noted all week, we remain unequivocally Bullish Gold over the long-term, however, we must see a close above 1565.8-1571.7 in order to reinvigorate near-term bullishness. For our complete technical outlook, actionable bias, and proprietary levels, sign up for a FREE two-week trial of Blue Line Express.

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