Energy Complex (NYMEX)
Crude Oil
Crude oil had a volatile week and is showing signs of upside exhaustion. We see Crude trading below $80.00 this week. And again we see this pull back as another opportunity to buy the dip. Frankly we do see crude moving towards the mythical $100 mark before the year is out. Heating oil continues to be a sell. We see this market trading below 214 this week. We also see heating oil breaking below 200 sometime this month.

Natural gas
Natural gas had a quick push up to 7.00 last week. This week we see this market moving slightly higher. Looking ahead a few weeks we do not see this market having the ability to trade above 8.00.

Equities
SP500, DJIA, NASDAQ
The stock market continues to rally on bad news. This is very strange and uncomfortable for many traders. At this point the market seems to want to test the old highs. We must advise caution as this current rally could turn on a dime if the FOMC indicates that they will not lower rates again. Keep trialing your stops with the daily trend line.

Financials
U.S Bonds
Bonds have managed to bounce a bit further than we expected but in doing so the market has formed a classic bear flag. We expect to see this market trading near the 110 handle again this month. Buy or spread puts on rallies.

Metals
Gold, Silver, Copper
Gold and silver both moved up further than we had expected last week. We had called for a stall and pullback and that call was clearly early. We expect these markets to begin to pull back this week with gold testing the 725 level and silver testing the 13.50 level. Copper continues to be strong and we continue to target a move to 375. Keep stops tight as this market is prone to sharp and fast breaks.

Grain Complex
Corn, Soybeans, Wheat
Wheat broke out from the bull flag formation we mentioned in the last issue. This should be the final leg of the rally. This market could trade all the way up to $11 before turning around so do not short this market yet. We continue to accumulate March of 2008 puts. Each time that wheat has had this type of rally, it has failed to hold onto the high prices for very long. Corn seems to have run out of steam and we have exited our long call spreads with roughly a 100% return on the original risk. We see corn trading back below 350 before it sees 400. Soybeans have stalled and will spend the next few days building a bull flag. We do see beans moving above 10.00 this month, but "beans to the teens" is still a long shot. Soybean meal on the other hand is a sell as it follows more closely with the price of corn. Spreading long beans against short meal is a trade we are putting on this week.

Softs (NYBOT)
O.J, Cocoa, Coffee, Sugar, & Cotton
OJ drifted sideways last week. We see this market heading back towards the 110 level in the near term. Buy or spread puts on any rally. Cocoa's rally has slowed down but we see another push coming that should test the old highs near 2125. We see coffee breaking out above 135 this week with a target of 140. Once the market reaches 140 begin to buy puts. Sugar did push above 10 cents last week but we do not see this market following through at this time. We expect sugar to be trading below 950 before it trades above 1050. Cotton made a quick head fake above the July highs and then turned back down and looks as if it will try and fill last weeks gap this week. We see cotton moving back below 60 cents before it moves above 70.

Meats
Lean Hogs, Live/Feeder Cattle, Bellies
Resistance at 98 did hold in the live cattle market as we mentioned last week. We continue to see this market drifting sideways to lower this week. We see this market trading between 94 and 98 for the foreseeable future. October Feeder Cattle drifted sideways all last week but this week we see it falling below 114. Lean hogs continue to trend lower and our long was stopped out last week. We will stick our neck again this week and attempt a new long trade with stops below 55. Pork bellies hit our target of 90 last week. We see this market continuing to push higher this week so buy any dips that come.

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.