Equities remain strong with solid action going into the holidays, reports Bill Baruch.

E-mini S&P (ESH)

Yesterday’s close: Settled at 3211.75, up 12.50

Fundamentals: It is quadruple witching day and the December futures and options expire on the opening bell at 8:30 am CST. While this event can bring additional volume and volatility, the volume over the last week and a half has been extremely steady and some of the best this year. Additionally, we wrote yesterday about volatility slipping out through midweek but instead this ultimately proved to be a healthy consolidation before the next leg higher unfolded. Yesterday’s gains were fairly broad with a slew of large companies gaining 1.5% to 2% and although the major banks and oil companies did not participate, such broad strength on such healthy volume and such directional volatility is not something to fade. The Biotech sector is building steam heading into 2020.

Today’s U.S economic calendar brings final Q3 GDP which is expected to remain steady at 2.1%. The Federal Reserve’s preferred inflation indicator the Core PCE Price Index is on the schedule for 9:00 am CST and is accompanied by Personal Spending and Income data as well as final December Michigan Consumer reads. Economic data continues to be mixed but we are still feeling the impact of looser monetary policy and the Fed’s added liquidity through financing operations. Yesterday’s $35 billion offering was again undersubscribed which likely added bullish tailwinds to record highs. When those tailwinds dissipate, which would be tough to time, our narrative remains one in which this market wants to see consistently improving data to maintain this pace of gains in 2020.

Technicals: Our narrative remains cautiously bullish and the S&P 500 secured a close out above 3200-3204.25 and continued price actin above here paves a path of least resistance to 3248.50. The NQ has been hovering above 8576.25-8590 all week which we noted as bullish and extended gains out above first and second key resistance yesterday.

Crude Oil (CLG)

Yesterday’s close: Settled at $61.18, up 33¢

Fundamentals: Gasoline is leading the way this week gaining 3% and trading to a three-month high. Crude oil is also trading to a three-month high, but the weekly gains have been much tamer, in the tune of half. We continue to believe last week’s U.S and China trade truce has been the driving factor amid already bullish tailwinds due to OPEC’s delivery two weeks ago and then Sunday night’s Industrial Production data from China got the week started off on the right foot. Furthermore, traders and funds are queuing off some of the weekly inventory data points; what showed better demand than the headlines and this has helped provide fuel to the latest leg. When a market wants to go higher, it goes higher.

Technicals: Crude oil spiked to a high of $61.40 yesterday before slipping back to the continuous chart trend line from the April high. We went to another charting program and actually see that trend line coming in right at $61.40. We are defining major three-star resistance today as $61.20 and a close above there is bullish.

Gold (CGC)

Yesterday’s close: Settled at $1,484.4, up $5.70

Fundamentals: Gold continues its battle, and it’s a healthy one! Equity markets are playing out the latest leg of fresh record highs and Gold is holding ground. The metal has not advanced and for now that is ok as it has withstood rising yields this week and a firm dollar. However, it cannot stay this way forever and we must see progress next week. GDP data underwhelmed but not surprisingly enough to move the dial. The Fed’s preferred inflation indicator the Core PCE Index is due at 9:00 am CST and as always accompanied by Personal Spending and Income data. Final December Michigan Consumer data is also due at 9:00.

Technicals: Major three-star resistance at $1,484.9 is a good one, it has kept gold contained amid a firm tape. It is concerning once again that our momentum indicator has risen to $1,482 which means continued price action below here will create a wave of selling. First key support comes in at $1,474.3.

Bill Baruch provides technical levels on all markets throughout the week at BlueLineFutures.com. Sign up for a complimentary two-week trial of 1 or all 4 of our daily Blue Line Express commodity reports!