Energies
Crude's incredible run took its first notable dip on Friday as the market failed to break through $90 and ended what is typically a bullish Friday in very bearish fashion. Monday is a critical confirmation day as a negative close might put bears in control for a bit, so I consider the close on Monday as a trend indicator. Natural gas calls continue to offer considerable upside potential for a volatility spike.

Financials
Frantic Friday bore witness to extreme fund selling on housing concerns and earnings. This stock market has set a definitive top and suckered a lot of funds and specs long with that breakout to fresh contract highs before breaking down. Now there are a LOT of funds without the excess cash that are trapped into liquidating. Concerns over problems in the Middle East are not helping either.

Throw in some foreign investment dollars creating a false support and this market could tumble hard and fast. Nevertheless this still offers opportunities to sell put premium on days like Friday because the market has shown a resilience that is not likely to completely disappear and thus there is probably a limitation to the downside. Bonds spiked on the market meltdown and are testing an upper limit, suggesting the resumption of rate cuts is a possibility; they are shooting blind here and I would fade any move in bonds without Fed confirmation.

The dollar is getting ugly and while I remain a dollar bull in long term, this market is not one where a perfect bottom can be called. However, let's take a look at some key currencies and just how overbought they are:

Euro - up 8% this year and over 10% since January 12

British Pound - up 6% since March

Australian Dollar - Up 13% this year and 19% since August 17

Canadian Dollar - Up over 20% since March 9

These markets are overbought and due to correct. Can the Canadian dollar continue its wild ride? With crude's overbought condition and gold setting up for a meltdown, perhaps it is the U.S. dollar's turn to make a move and the Canadian possibly to retrace back under par. I would scale into Canadian puts, Euro puts and short Aussie dollars.

Grains
Corn and soybeans both gapped through critical resistance this week and appear to be on the verge of a critical price breakout that could set up a seasonally unexpected winter rally. Wheat surprised many traders with a lock limit test as tight supplies continue to plague this market. Traders say if it hasn't happened by October it isn't going to happen, but this year appears to be the exception. Rice continues to impress and I suspect the China crop is going put this market into hyper drive, making it a strong buy if I can handle the watching-paint-dry trading action in this ultra-thin market.

Meats
Cattle prices remain channeled despite a potential top being set and a bearish technical formation on a daily chart. I would develop put plays here. Hogs are oversold and I remain steadfast in the view that this market is not fundamentally or technically set up to continue to break down much further. I see calls and long futures here.

Metals
Gold continued to press fresh highs amid a falling dollar and rising crude prices - feels like deja vu a bit here, but this trend has about run its course and gold's choppy rally is a good sign that it is a bit weak at the knees. Silver's inability to break through $14 also suggests this market is trying to get ahead of a gold breakdown and is apprehensive about continued upside. The last time silver made a run like this it felt like there wasn't a seller to be had; there is a bit of a different feeling this time around. Copper is like the little engine that couldn't: try and try as it might that $4 mark is going to be extremely tough to crack. A bear break of a pennant makes this market look like it is ready to tumble once again, and rising stockpiles support the argument that copper has topped. Platinum is in an extreme overbought condition due to mine shutdown issues in South Africa, but remains a solid short at these levels.



Softs
Coffee took a devastating blow this week as rain in Brazil's drought-ridden regions brought huge fund-selling and stop-triggering intraday meltdowns. This is an excellent market to be an option trader in right now. I would play strangles, bull call spreads or just jump long some calls on the dip. Kenya is reporting devastating crop issues due to coffee berry disease and leaf rust, issues so bad that the UN is throwing money at the problem hoping it will go away. The market is also seeing support from poor results in Vietnam and a general global supply dip that is setting up a year that leaves coffee extremely exposed.

OJ spiked on the juice yield numbers from the USDA but showed on Friday that this market may not have the legs in the near term to sustain this move. It was a much needed retracement after falling about 50% from the highs, but the market is likely to congest and offer premium collection opportunities. Cocoa is meandering around a mid-range, almost as if waiting for December option expiration before launching another run to the upside. I would buy March calls and play the upside potential here. Cotton is on the move again and is a strong buy. Sugar is seeing some support in sympathy with crude's recent run, but the underlying fundamentals here show the real reason to buy this market. The bad news is out on supply and now we are seeing strong sugar usage in Brazil for ethanol production and a market that is cyclically ready to bottom.

James Mound is the head analyst for www.MoundReport.com, and author of the commodity book 7 Secrets. For a free email subscription to James Mound's Weekend Commodities Review and Trade of the Month, click here.