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Morning Express

October 24, 2019

E-mini S&P (December)


Yesterday’s close: Settled at 3005.75, up 11.25


Fundamentals: Earnings and trade optimism have lifted the S&P back to highs of the week. Although it is flirting above a crucial marker at 3008.50, the NQ trails slightly in relevance to highs set Tuesday and last Thursday. The Dow is trading nearly 1% from last Thursday’s high given weakness during that span in companies ranging from Boeing, the largest component in the price weighted index, to Nike. This morning, Comcast beat earnings estimates headlined by internet subscriber growth. Southwest was another strong story, rising ticket prices and strong travel demand helped offset the hit taken from Boeing’s 737 Max grounding. 3M underwhelmed and cut forecasts, but the stock is hanging in. Twitter is the biggest loser of the day with the stock falling 20% after an all around weak third quarter. American Airlines has slipped into the red after reporting better earnings but missing on revenue. After the bell, we look to Amazon, Intel and Visa.


The ECB left policy unchanged this morning as expected. President Mario Draghi takes the podium at 7:30 am CT in what is his last meeting at the helm. He will certainly field questions on his outlook and this will impact markets broadly. Durable Goods data missed across the board, echoing deteriorating growth just as October Eurozone Flash PMIs did this morning which also came in below expectations. We look to U.S Flash PMIs at 8:45 am CT.


Technicals: The stock market broadly has done everything right this week. Strong support levels have held upon shallow pullbacks. Now, it just needs to achieve the constructive close we have been referencing since last week. This would be the S&P decisively above 3008.50 and the NQ decisively above 7948.25-7958.50. We believe doing such would create a bit of a melt-up factor bringing each to not only record highs but targeting 3046.50-3057.75 in the S&P and 8150-8179.25 in the NQ. Please note we do have strong resistance levels between here and there aligning around the record highs. For now, the tape is out above our momentum indicators on the session and this works to bring first key support. For the NQ, this also aligns with settlement from yesterday. These are now a line in the sand defining the immediacy of this bullish wave and a move or close below here will begin to signal a more intermediate-term failure.


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Bias: Neutral/Bullish


Resistance: 3008.50***, 3014.25*, 3021.75**, 3027.25-3032.50***, 3046.50-3057.75***


Support: 2998.50-3002.50**, 2994.50*, 2984.75-2988.25***, 2975**, 2965.50**, 2951.25-2953***, 2937.75-2941***



NQ (December)


Resistance: 7948.25-7959.75***, 7994.75-8002.50**, 8051.75-8037***, 8072***, 8150-8179.25***



Support: 7901.50-7904.50***, 7858.75-7863.50*, 7795.75-7810.25***, 7760.25**, 7664.75-7673**





Crude Oil (December)


Yesterday’s close: Settled at 55.97, up 1.49


Fundamentals: EIA data yesterday showed a headline draw of Crude inventories. Although small at -1.6799 mb, it was enough to rev the bullish engine and after the Managed Money short position (still net-long) has more than doubled over the last three weeks, every rally starts with a short-cover. Does it stick? We don’t believe so. Coupling a failure to trek to fresh lows on bearish inventory data through the last few weeks leading up to yesterday with tailwinds from OPEC jawboning (even though Russia does not seem to be on board), we have a bullish wave on our hands. Lastly, throw in a broadly upbeat risk-environment as equity markets are within an earshot of record highs, an upbeat trade narrative and fresh liquidity measures from China earlier this week. Still, Flash PMIs from the Eurozone this morning missed expectations across the board and the same goes for U.S Durable Goods; these echo the deteriorating global growth. We look to U.S Flash PMIs at 8:45 am CT.


Technicals: After breaking out through the 54.70-55.00 ceiling, price action settled right at our next major three-star level at 55.92. This is undoubtedly a bullish wave, but we are also interested in seeing it stick on a weekly basis. Near-term, our Bias is very neutral, while longer-term we see value in selling this region. The bulls are in the driver’s seat until a close back below 54.70-55.00, while a move below 55.34 intraday begins to neutralize the tape as this is our momentum indicator.


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Bias: Neutral


Resistance: 55.92***, 56.80-56.82***, 57.08-57.19**, 58.22**, 59.11***


Pivot: 55.72-55.97


Support: 55.34**, 54.70-55.00***, 53.62**, 52.46-52.73***





Gold (December)


Yesterday’s close: Settled at 1495.7, up 8.2


Fundamentals: Gold is holding ground extremely well but has not secured a close back above the psychological $1500 mark for two weeks. Economic data this morning has been dismal, Eurozone and German Flash PMIs all missed with Manufacturing contracting more than expected. U.S Durable Goods all slipped worse than expected, although Jobless Claims nudged out a victory. U.S Flash PMIs are due at 8:45 am CT and this will certainly set a tone into the weekend and ahead of next week’s Fed decision; they are expected with a 93.5% probability to cut by 25 basis points. The ECB left policy unchanged emphasizing they plan on reinvesting principal payments from maturing securities and keeping policy accommodative for the foreseeable future.


Technicals: Gold is testing the crucial key resistance level at 1500.9-1503 again today while holding out above our momentum indicator at 1495. This is constructive but we also see strong major three-star resistance at 1509-1515.6 and this aligns multiple technical indicators as well as a trend line from the September high. We are more Bullish in Bias given the construction against major three-star support once again, but we must see a strong close in order to hold such.


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Bias: Bullish/Neutral


Resistance: 1500.9-1503**, 1509-1515.6***, 1527.5***


Pivot: 1495


Support: 1484.5-1488.2***, 1465**, 1450-1454***, 1413.2***



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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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