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© 2017 by Blue Line Futures, LLC. 

Morning Express

January 13, 2020

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E-mini S&P (S&P)


Last week’s close: Settled at 3264.75, down 11.25 on Friday and up 29.25 on the week


Fundamentals: U.S benchmarks traded to record highs early Friday morning before an underwhelming Nonfarm Payroll report softened the tape. There were 145,000 jobs created in December versus 164,000 expected and Average Hourly Earnings increased by only 0.1% versus 0.3% expected. Although today’s economic calendar is quiet, the week is jam-packed, and as our narrative suggests; we must see stable to better economic indicators in order to fuel this market higher in the near-term. Inflation data is the only component that must remain subdued as it keeps the Fed patient. U.S CPI, the closely watched inflation read, is due tomorrow. Through the week, we look to fresh January NY Fed and Philly Fed Manufacturing as well as December Retail Sales and January Michigan Consumer data.


There was a wave of profit taking Friday due to Nonfarm Payroll but also on the heels of new sanctions announced by the White House on Iran. This left a bit of uncertainty ahead of the weekend and coupled with the data was good reason for traders and investors to take some chips off the table. Late Friday, Iran admitted to accidentally shooting down the Ukrainian airliner which has led to ongoing protests against the Iranian regime. Local clashes have ultimately preoccupied the government from further retaliations, seemingly bringing relief to the market.


The real relief is coming as signing day nears. The U.S and China are expected to sign the “Phase One” trade deal in Washington Wednesday. Also, earnings season unofficially kicks off tomorrow with the big banks, JPMorgan, Citigroup and Wells Fargo all report before the bell. Alcoa, Bank of America, Blackrock, Goldman Sachs, UnitedHealth and more report Wednesday.


Technicals: On Friday, we advised that there is unfinished business at major three-star supports in each the S&P at 3259-3264 and the NQ at 8944.50-8952.50. The S&P traded to an intraday low of 3260.75, tagging support and covering the gap. Although the NQ did not complete such, it is was more importantly done by the S&P. Price action is currently gyrating around our momentum indicators and holding these levels through the first hour will set up for a healthy session. Strong major three-star support sits just below for the S&P not aligning Friday’s low and settlement as well; this will create a line in the sand floor for the immediate-term bullish trade. The NQ’s Friday’s settlement and current session low bring first key support and below there is the arguable unfinished business major three-star support.


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Bias: Bullish/Neutral


Resistance: 3287*, 3295**, 3304.75***, 3314.50**, 3346***


Pivot: 3275.50


Support: 3260.25-3264.75***, 3248**, 3232.25-3235.25**, 3221.75**, 3208.75-3213***


NQ (March)


Resistance: 9049-9055.50**, 9100-9136.50***


Pivot: 9015


Support: 8978.25**, 8944.50-8952.50***, 8890.25-8907.25***, 8848-8853***





Crude Oil (February)


Last week’s close: Settled at 59.04, down 0.52 on Friday and down 4.01 on the week


Fundamentals: Crude Oil is holding steadily below the $60 mark after tensions eased in the Middle East and Nonfarm Payroll underwhelmed. However, optimism due to the signing of the “Phase One” trade deal is keeping a bid under the market and risk-sentiment broadly. This week is full of economic data with crucial reads from the U.S on manufacturing and the consumer as well as deluge from China Thursday night than includes Q4 GDP and December Industrial Production. Remember, a strong Chinese Industrial Production beat last month helped fuel Crude Oil for a breakout mid-December.


On Friday, Baker Hughes announced a drop of 11 Oil Rigs which can be viewed as buoying the tape a bit. However, Canadian Rigs jumped by a whopping 93 to nearly one-year highs. Traders should keep an eye on this trend. Also, last week President Trump said the U.S does not need Middle East Oil. Over the weekend, the Indian Oil Minister said he expects Indian demand to surpass that of China in fiver years. Furthermore, they indicated imports could come from the U.S. Broadly, this narrative can bring longer-term support if it gains traction.


Technicals: Crude Oil has traded in a very confined range below major three-star resistance at 59.74-59.84 which we said keeps the bears in the near-term driving seat and above first key support at 58.57-58.65. Below here though, there is rising major three-star support that now comes in at 58.02-58.35 aligning multiple levels including a trend line from the February contract low on October 3rd. February options expire Wednesday and then we are on to the March contract which will also see significant support in this region. A break below $58 though would trigger strong waves of selling, however, it is tough to assess the damage to what was becoming a very overcrowded Net-Long Managed Money Position after last week, as Friday’s Commitment of Traders was only through Tuesday but still showed an expansion. That Managed Money position will likely liquidate below $58 if they have not already.


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Bias: Neutral/Bearish


Resistance: 59.74-59.84***, 61.01-61.31***, 62.34-62.42**, 62.90-63.38***


Pivot: 59.51


Support: 58.57-58.65**, 58.02-58.35***, 56.03-56.25***





Gold (February)


Last week’s close: Settled at 1560.1, up 5.8 on Friday and up 7.7 on the week


Fundamentals: Gold was buoyed by a weak Nonfarm Payroll report Friday and new sanctions announced by the White House on Iran ahead of the weekend. Despite the Nonfarm miss, Gold knee-jerked higher before working slightly lower. This exuded the geopolitical risk-premium that was built into the safe-haven through the week due to Middle East tensions, something that was slowly dissipating. However, the new sanctions kept a bid under the tape and sent Gold to fresh session highs. Coming out of the weekend though, a calmer geopolitical landscape and stronger risk-environment seen through equities has reinvigorated that late Thursday and early Friday weakness in the metal. Ultimately, we are prepared to see additional geopolitical risk-premium come out of Gold this week. Additionally, this week will be somewhat of an inflection point for the metal; although today’s economic calendar is light, data from around the world makes for a jam-packed week. Tomorrow, we look to U.S CPI.


Technicals: We remain unequivocally Bullish in Bias Gold in the longer-term, however, near-term we have expressed our uncertainty by reducing our Bias. We will look to that 1555.2-1558.4 mark to be our pivot to start the week and our momentum indicators falls right in here. Below here, the metal is vulnerable to waves of selling and given what has quickly become an overcrowded Net-Long Managed Money position, traders need to be cautious as this can exacerbate the downside. A close above 1566.2-1571.7 is again near-term bullish.


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Bias: Neutral/Bullish


Resistance: 1566.2-1571.7***,1588.2-1595.7***, 1613.3**, 1626**


Pivot: 1555.2-1558.4


Support: 1538.3-1541**, 1529.8-1533.2***, 1510-1514.3***



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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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