• Blue Line Futures

Morning Express | ADP Payroll | Fed, ECB, & EUR/USD at 1.20 | Oil Inventories | Gold Range

E-mini S&P (September)


Yesterday’s close: Settled at 3527, up 28.00


NQ, yesterday’s close: Settled at 12,312.50, up 198.50


Fundamentals: Calling a near-term top in this historic stock market rally is a fool’s errand, but today is as good a day as any to say, ‘if not today the top is near’. U.S. benchmarks were again broadly driven by tech yesterday and through the overnight. The NQ is up nearly 4% on the week and if you look at the last two weeks of this melt-up the NQ gained 3.72% and before that 3.85%. Characterized by the most irrational standards set by the latest leg of this melt-up breakout, even the NQ this week has already achieved what arguably is its peak range. Next, when we see and hear of people on social media counting their long positions in highly volatile stocks as a 20% ROI weekly savings account the irrational exuberance is real. Will this market come crashing down? Maybe, but that is not what we are calling for here. Simply put, this latest leg is overdone, and we expect a sharp retracement in the very near future.

What has changed you might ask? The U.S. Dollar is finally showing signs of life. If you’ve lived in a bunker since April, which would actually not be all that surprising and partially commendable, then you may have missed the memo; the U.S. Dollar has been the sacrificial lamb for not only buoying the economy, but the stock market. Yesterday, the Euro traded above 1.20, the highest level since May 2018. Guess what happened? Those ECB heads who have been paving the way for Euro strength like an Olympic curling team are starting to show signs they fear the beast. Yesterday, we detailed the contraction in Eurozone YoY CPI. With a meeting in two weeks and coming on the heels of unprecedented measures by the Federal Reserve, it is now the ECB’s turn to step in, buoy their slipping economy, and do all they can to boost inflation. Oh, and let us not forget that lauded budget with forgivable loans to the hardest hit nations within the bloc, it still has not been ratified. What does this all mean? A weaker Euro and thus a stronger Dollar, which in turn forces the stock market rally to take a breather from extremely elevated levels.

ADP Payrolls came in light today at 428,000 versus 950,000, but the U.S. Dollar is lingering near session highs. We next look to Factory Orders at 9:00 am CT along with NY Fed President Williams. Cleveland Fed President Mester speaks at 11:00 am CT and Minneapolis Fed President Kashkari follows at 1:00; both are 2020 voters.


Technicals: Price action has steadily climbed and although it is showing no true signs of slowing, it has tested an overhead trend line in the S&P essentially dating back a decade. Also, as discussed above, the NQ has arguable achieved its weekly peak range. Given such exuberance, we must believe it is as good of a time as any for this market to go through a corrective phase. In order to do so though, price action must chew through critical levels of technical 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 each morning.

Crude Oil (October)


Yesterday’s close: Settled at 42.76, up 0.15


Fundamentals: Crude Oil slipped back below the $43 mark as the Dollar strengthens and pressures commodity prices. Inventory data is front and center at 9:30 am CT and expectations are mounting for the sixth straight weekly drawdown. Last night, the API survey said Crude stocks fell by 6.36 mb, when analysts had predicted a draw of less than 2 mb. API also reported –5.761 mb Gasoline and -1.424 mb Distillates. Still, the news could not buoy prices steadfastly above $43. Furthermore, the tape is extremely unenthusiastic given reports that Russian production overall fell by 13% August. Expectations for today’s official report are -1.887 mb Crude and -3.036 mb Gasoline. Remember, these results come on the heels of last week’s storm disruptions. We are expecting lower prices, along with the broader risk-environment, with U.S. Dollar strength being a major catalyst.


Technicals: Crude Oil failed to settle above the Pivot pocket from yesterday that ranged from 42.92-43.15. This has been tightened a bit today after settling at 42.76. Weakness is facing first key support at 42.31 and overall, we find the consolidating uptrend intact until a close below ...  Please sign up for a Free Trial at Blue Line Futures to have our entire technical outlook, actionable bias, and proprietary levels emailed each morning.

Gold (December)


Yesterday’s close: Settled at 1978.9, up 0.3


Fundamentals: Despite a terrific start to yesterday’s session, Gold finished flat. The struggle to extend out above $2000 encouraged profit taking from the bull camp. Late U.S. Dollar strength coupled with underwhelming technical patterns has now encouraged fresh selling from the bears and further liquidation of longs. We remain Bullish in Bias Gold over the long-term, however, today’s tape is exactly why we do our best to exude patience and reiterated yesterday that 1990-2000 is not when you want to be a buyer, that opportunity will come again. Bill Baruch spoke with CNBC’s Futures Oulook yesterday to discuss using Platinum as a proxy to capitalize on weakness in the precious metals sector.


Technicals: Although we are not too keen on the price action in the near-term, we will continue to hold our cautiously Bullish Bias because we believe the long-term Gold rally above $1800 is here to stay. There are certainly short-term short opportunities for more active traders. Whether you are bullish or bearish in the immediate-term traders should lean on 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 each morning.


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