Stocks and Gold open with a bang, what does it mean?
Bill Baruch of Blue Line Futures - - Wed Jan 03, 7:27AM CST
Morning Express

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E-mini S&P (March)

Yesterdays close:Settled at 2693 gaining .6% to start the year.

Fundamentals:The S&P started the New Year with a bang, reversing all losses from Friday and edging a new all-time high into this morning. The wave of profit taking late on the last session of the year is now confirmed to be a fluke and the bull run is alive and well. After a slow start to the year, Europe is green this morning and Germanys Unemployment read was better than expected pushing to a new record low. The NQ recovered very well yesterday but the small cap Russell 2000 continues to lag. We believe today will be a critical day for the small caps, they must join the party. Furthermore, how might they react to ISM Manufacturing data at 9:00 am CT and FOMC Minutes at 1:00 pm CT. The S&P is set to extend gains and we are again Bullish, but it will be crucial for the small caps to hop on board. We like to believe that the stock market can continue to grind higher into Fridays Nonfarm Payroll, however, FOMC Minutes have been known to spark reversals so stay vigilant through todays close.

Technicals:We took a patient approach yesterday after last weeks trade came to fruition. First, we feared pressing a bear case that we dont believe in though yes, we do believe the market is overdue for a healthy 3-5% correction. Second, our Bias did become...Please sign up for a Free Trial to view our entire technical outlook and proprietary bias and levels.

Crude Oil (March)

Yesterdays close:Settled at 60.37

Fundamentals:Crude Oil is sitting and comfortably holding $60. We believe that the unrest and clashes in Iran have kept a bid under prices not because of any current disruption but the potential of one not only within their borders buy from abroad. The U.S already wants to tighten sanctions on Iran and pull out of that 2015 nuclear deal and this could give them the reason to do so. This is all speculation yes, but it is keeping a bid under prices. Inventory data will come into play later today with AI at 3:30 pm CT and the EIA tomorrow afternoon. Data on Russias output was released yesterday showing an average of 10.98 mbpd in 2017. This was actually their highest since the Soviet Union despite the OPEC and Non-OPEC production cap. Remember when they ramped up production ahead of the November 2016 production deal? They only had to reduce production from that level. As the EIA data comes back into the picture tomorrow, remember this U.S estimated production data will be from the last week of the year. Ultimately, we would expect to see production pick back up this week and show on next weeks report.

Technicals:We want to remind everyone out there that our Bias has been Neutral for quite some time now. Do we believe Crude Oil is due for a correction on this run? Absolutely! Are we sitting here selling and recommending selling? Absolutely not!...Please sign up for a Free Trial to view our entire technical outlook and proprietary bias and levels.

Gold (February)

Yesterdays close:Settled at 1316.1 and has traded higher in 12 out of 13 sessions since bottoming the day before the Fed hiked rates.

Fundamentals:We looooove Goold. But lets be real. Gold has had quite the run since its December 12th bottom and this crucial week is about to unfold. Heck, the Dollar is even seeing some profit taking support today. ISM Manufacturing data is due out at 9:00 am CT and the FOMC Minutes from the December hike meeting later today at 1:00 pm CT. For us, what it boils down to most is the Fed speak Thursday and Friday and wage growth on the Nonfarm Payroll report. Lets also not forget the ISM Non-Manufacturing read on Friday, a data point we really like to watch and one that retreated from lofty expectations last month (bullish for Gold). However, what we dont want to see is the Fed to appear to be a little more hawkish now that tax-reform legislation is signed. Remember, at that December 13th Fed meeting there was still some logistical uncertainty if it would get signed before Christmas. Lets be clear here, we remain long term Bullish Gold and long term Bearish the Dollar (just yesterday we said that we believe the Dollar has at least 4% lower to go in Q1). But, if you have enjoyed this run, it is important to lock in some gains in the near term as the Dollar might make its last stand over the next two to five trading days.

Technicals:Price action is flirting with the 1317 level and hanging tough after peeling back from an overnight high of 1323, the highest since September 20th...Please sign up for a Free Trial to view our entire technical outlook and proprietary bias and levels.

Natural Gas (February)

Yesterdays close:Settled at 3.056

Fundamentals:Prices are holding tough and gripping to $3 ahead of tomorrows stock read and this weekends artic blast up and down the east coast. It was near freezing in Florida last week, and when Floridians have to turn to the thermostat 9 times out of 10 Natural Gas is turning higher. Stock drawdown expectations for this week and next are holding stead at over 200 and 300.

Technicals:Price action is clicking to the major three-star level at 3.00-3.01 and yes...Please sign up for a Free Trial to view our entire technical outlook and proprietary bias and levels.

10-year (March)

Yesterdays close:Settled at 12322

Fundamentals:Treasuries were under immense pressure yesterday with equity markets recovering so strongly from Fridays late selloff. Prices have now middled out from last weeks high ahead of the beginning of a long week of data. German 10 years have retreated about 3 basis points since the start of the week and this is a good sign for the 10-year prices. ISM Manufacturing is due at 9:00 am CT and FOMC Minutes from the December hike meeting at 1:00 pm CT.

Technicals:Price action breached first support at 12320-123225 with a session low of 12317 yesterday. With the tape stabilizing into today...Please sign up for a Free Trial to view our entire technical outlook and proprietary bias and levels.

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