The theme this week will be continued strength in the Dollar. This short-term strength will stall many of the rallies we have seen in commodities including but not limited to the Grains, Energy, and Metals. You will see an overall contraction of the CRB index. We see this as healthy and in fact necessary to sustain these longer term up trends. Be patient if you are attempting to buy these dips.

Energy Complex (NYMEX)
Crude Oil:
Crude oil is now north of $85. We hope you bought the pullback last week as we suggested. If you did, it is time to move those stops up to somewhere below $83.50. We do see Crude oil moving higher in the longer term but near term we could see a pullback to the lower 80's if Wednesday's API report shows a greater than expected build. As we did last week, use any significant pullbacks as buying opportunities.

Natural gas:
Natural gas did push lower last we as we mentioned it would. If fell just short of our target at 6.50 but our trailing stops took us out at a profit none the less. This week we see continued consolidation between 6.50 and 7.50.

Equities
SP500, DJIA, NASDAQ:
The S&P 500 did in fact push to new highs last week, but is already showing difficulty hanging onto those gains this week. Our models show both the Nasdaq and the S&P as being overbought for the near term. We see the S&P 500 testing support near 1525 this week.

Financials
U.S Bonds:
Bonds found support at the 110 handle but we continue to expect this market to move lower ahead of the Halloween Fed. meeting. We are still targeting a move to 108 this month.

Metals
Gold, Silver, Copper:
My call for dollar strength last week was obviously a bit of an early call but we still feel the same as we did last week and this last push higher only served to give us an even better entry point for our shorts. We are short silver from 14.00 and are targeting a move below 13.00 by month's end. Our target for gold is a move back below 725, also by month's end. Again we are not bearish these markets for the long term in any way; we are simply doing a short-term counter-trend trade to capitalize on an overbought market. Palladium is a short this week.

Grain Complex
Corn, Soybeans, Wheat:
We still see wheat falling significantly lower before Thanksgiving. We are still targeting a move back towards 7.00 in that time frame. The wheat market is going through a bubble much like the Nasdaq did in the late 90's. Do not buy this dip in wheat! If you are a farmer wondering if you should hedge or not, the answer is YES. Hedge now or wish you had later. Corn is still stuck in its range. We see corn continuing to be range bound in the near term with a slight bias to a downside breakout. Soybeans remain the one bright spot in the grain complex. We see beans pushing back up to and through the recent highs. The USDA has recently confirmed new cases of ASR (Asian Soybean Rust) in Missouri, Georgia, and North Carolina. Virginia Tech has reported that ASR can progress very rapidly and defoliate a soybean plant within four to six weeks after the initial infection. IF this ASR issue continues to worsen, look for the old beans to the teens saying to finally become a reality.

Softs (NYBOT)
O.J, Cocoa, Coffee, Sugar, & Cotton:
OJ has seen wild volatility in the past few trading sessions. We see this a short squeeze and are buying put spreads to capitalize on this squeeze. There are a couple of storms brewing in the Gulf but we do not see them as real threats at this time. Computer models of the predicted track of these storms are all over the map. Cocoa has consolidated the sell-off as we expected and we are seeing signs that this market is oversold at the current price. We see a push back up to the 1900 level in the near term but follow-through beyond that point is shaky at best and we will therefore continue to stand aside. Last week I told readers not to chase coffee higher as I said it would break down big time after testing the 140 level. Well today we saw a huge breakdown in coffee on the immediate day after we traded above 140. So I hope you heeded my warning and did not chase this market. Do not rush in to buy this dip yet. We will be buying this dip in time but for now we will be patient. Sugar is still drifting sideways and we are still looking at other markets we feel have greater potential. We are still biased to the downside in sugar. Cotton is trying to stage a rally but cannot seem to get it together long enough to really move. We still see the double top on the daily charts as significant resistance in the near term.

Meats
Lean Hogs, Live/Feeder Cattle, Bellies:
Live cattle did see a brief push through 94 as we had expected but managed to end the week still above 94. This week we see more downside with a push to 92. Feeder cattle continued to trade lower last week but failed to hit our target at 112. We see this trend continuing this week and we are now targeting 111. We are still long hogs from two weeks ago and our stops remain below 55. We do expect hogs to turn up soon and when it does we will trail the stop by 2.00 points. Pork Bellies traded sideways last week but we remain optimistic and see this market pushing back above 90 in the near term. Keep stops below 85 until the market pushes above 92.50 and then trail it by 3.50 points.

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.