Energy Complex (NYMEX)
Crude Oil

Crude oil has begun to consolidate as we expected it would. Trend following longs should have their stops just below $80.00. We expect to see this market spend the week consolidating and we continue to see a pullback below $80.00 on the horizon. Use this next pullback as a buying opportunity. Heating oil is a sell this week.

Natural gas

Natural gas tried to stage a rally but again failed to follow through. We continue to expect this market to be range bound around the 6.00 handle.

Equities
SP500, DJIA, NASDAQ

Last week we mentioned that we were targeting a move to 1550 on the S&P 500. We saw a sharp rally up to that point after the FOMC surprised the world with their 50 basis point cut. We continue to see this market struggling to make new highs this year. This week we expect to see this market drift sideways while it tries to figure out the Fed's next move. We do not see a huge directional move coming in this market in the near term but our short term bias is to the downside.

Financials
U.S Bonds

Bonds broke down as we expected after the FOMC announcement last week. They managed to fall all the way to the 110 handle. We see this down trend continuing in the weeks ahead. Look for a slow grind lower as this market continues to become more and more concerned about inflation every day.

Metals
Gold, Silver, Copper

Gold has in fact taken out the 2006 highs, but as soon as it did that we began to see it stall. We do see this market beginning to pull back this week and expect to see it below 720 by the end of this week. Silver also did move above 13.50 but it too is showing signs of a stall/pullback materializing this week. We could see silver pullback to about 13.00. Copper took off and did break out above 350 as we mentioned it would in last week's issue. We are now targeting a move to 375 in the near term.

Grain Complex
Corn, Soybeans, Wheat

Wheat has spent the last two weeks drifting sideways while in consolidates the recent rally. We see a clear bull flag on the daily charts and that should point to an upside break out coming soon, bet we also see more risk in this market than ever before. That being said we still feel that March 2008 out of the money puts are a good way to try and catch a correction in the longer term. Corn finally broke out above 370. We are now targeting a move to 4.00 in the near term. Frankly though we do not see corn being able to hang on to these higher prices for very long so keep stops tight. Soybeans remain strong and we continue to target a move to and trough 10.00 in the near term. At the same time though we feel that both soybean meal and soybean oil will begin to trade lower even as beans themselves move higher. So this will create a lot of opportunities in the good old "crush spread".

Softs (NYBOT)
O.J, Cocoa, Coffee, Sugar, & Cotton

OJ has managed to rally above 130. We are looking at entering some put spreads this week as we expect OJ to trade below 110 by the end of hurricane season. Cocoa really took off and hit out 2000 objective much earlier than we expected. We do see this market continuing higher in the near term but we do not expect to break out above the summer highs at this time. Coffee did push above 130.00 and should find its way above 135.00 this week or next. We continue to see the rally as unsustainable over the longer term and will look to buy puts on a push over 135.00. Sugar has begun to push towards 10 cents and could rally as far as 10.50 before stalling and turning back down. Cotton has been pushing higher for a few weeks now but we do not see this market breaking out above the summer highs. In fact we see this market fall back towards 60 so use this rally to buy puts.

Meats
Lean Hogs, Live/Feeder Cattle, Bellies

Live cattle failed to breakdown and instead staged a rally. We see resistance at 98 holding this week so we do not expect any major rally this week. Feeder cattle failed to hit the 114 level, but remains negative none the less, and we continue to target a move below 114. Lean hogs did not hold support above 63.00 the way we thought it would. We do see this as a good opportunity to buy the dip with stops below Friday's lows. Pork bellies have put in a solid bottom at 85 and we see this market moving north of 90 by early October.

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

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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.