Energy Complex (NYMEX)
Crude Oil
Last week we correctly predicted that oil would hit $80. We have seen that come to pass and now the question is will we continue on toward the mythical $100 level. Near term we expect to see Crude oil begin to consolidate the recent gains which should show up on the daily charts as a bull flag. Longer term we do expect to see higher prices in Crude oil but near term the bull is about to reach a point of exhaustion and should therefore begin to drift sideways to lower. We could see a fast break down to the $75 level so keep your stops below the current uptrend line on the daily charts, somewhere near the 77.55 level on the Oct. contract.

Natural Gas
We see natural gas continuing to drift between 6.00 and 7.00 with little directional bias this week so we will stand aside.

Equities
SP500, DJIA, NASDAQ
A quick look at a daily chart of the S&P 500 and you can see that we have been drifting sideways now since late July. We expect the next directional signal to be to the upside and we see the S&P 500 moving back up to test the 1550 level within the next 30 trading days. We do not, however, see the highs being tested and continue to feel that the high for the year has already been seen.

Financials
U.S Bonds
Bonds have already begun to back off of their highs above the 114 level and should see a break below 112 after the FOMC meeting. The bottom line here is that despite trouble in the real estate market, inflation will remain the number one concern for the Fed. as we go forward. Once the bond markets digests that fact we will see the market move lower in anticipation of rate hikes rather than cuts later this year and into next.

Metals
Gold, Silver, Copper
Gold continues to push higher ahead of the Fed. and despite a firming Dollar. We feel that in the near term this current rally will fall short of breaking out above the highs near $732.00. We see gold pulling back to test support at the $700 level after the FOMC meeting and then a rally through the previous highs. Silver is also moving higher but here too we feel that this rally will stall before we hit 13.50. Copper continues to drift slightly higher, but has yet to stage a significant rally. We continue to target a move through 350.

Grain Complex
Corn, Soybeans, Wheat
Wheat continues to squeeze the shorts. This is a classic blow off move with many gaps along the way. This trend is not one to get in the way of. These blow off moves often move farther than anyone would have predicted. Yes that is exactly what I said in last weeks issue but frankly nothing since then has changed. Buy out of the money puts in either Dec. or March contracts and wait. Corn continues to drift in a more or less sideways range between 340 and 360. We need to see a decisive push outside of that range to attract fresh buying or selling. Our bias remains to the upside for the time being. Soybeans pushed to and through our 9.50 target from last week and at this point looks as if it will test $10.00 by months end. It's still to early too talk about "beans in the teens" but it may finally happen later this year if the current trend continues.

Softs (NYBOT)
O.J, Cocoa, Coffee, Sugar, & Cotton
OJ staged another dead cat bounce within and overall down trending market. We feel opportunities are limited in OJ at this time and choose to trade elsewhere. Cocoa is still pushing higher and we continue to target a move to 2000 by the end of October. We could see more upside beyond that but for now we stand firm with our target at 2000. Coffee took off today and could see follow through to the 1.30 level this week. Beyond that we could see a move to test the spring of 2005 highs near the 1.36 level. Frankly that is a bit of a long shot but worth mentioning. Longer term we see coffee being unable to sustain this current rally and therefore longer term traders should use this rally to accumulate puts. Sugar still cannot seem to get a rally going but be patient as we still see a push to 10 cents coming in the not too distant future. Keep stops at or below 9 cents until we push up through 9.75 and then trail your stop with the market. Cotton continues to rally but has yet to come close to testing the summer highs. We see this rally stalling before we get close to those highs and therefore are not initiating any new trades in this market at this time.

Meats
Lean Hogs, Live/Feeder Cattle, Bellies
Live cattle did push lower last week as we mentioned it would. We continue to see this market moving lower in the near term but we do not expect a huge breakdown but rather a slow grind lower. Feeder cattle did break below 118 and in doing so caught a number of stops that drove the market down through the 116 level. Look for this market to test the 114 handle later this week. Lean hogs broke below support at 65.00 but should find support before hitting 63.00. Pork bellies have now formed a potential triple bottom near the 85.00 level, after hitting last weeks target above 90. This wee we see this market drifting sideways between 85.00 and 90.00.

Derek Frey is Head Trader at Odom & Frey Futures & Options.

Risk Disclaimer
Past performance is not indicative of future results. Trading futures and options is not suitable for everyone. There is a substantial risk of loss in trading futures and options.