Energies
As Turkey Day approaches the energy sector is on the cusp of a major price failure. Let's talk meat and potatoes here. The prep work for this tasty meal of falling oil prices has all been nicely laid out in just the past two weeks:

1) The Fed changes interest rate policy stance on fears of commodity (oil) price inflation

2) Its Thanksgiving week and most of the country is in shorts and t-shirts: no cold = delayed winter heating oil demand

3) Geopolitical fears move to the backburner

4) Inventory report makes a trend shift - one of the largest disparities in crude oil inventory numbers (forecast versus reported) makes

it two straight weeks of over-estimated draw downs in inventory and major trend shift in the underlying supply pattern

5) A recent increase in margin rates for crude futures of about 20% signal a potential turning point

6) The Canadian dollar tops signaling a leading indicator of a natural resource cycle top

Financials
The stock market has seen extreme choppiness and an overall bearish tone as the sub-prime fallout and lackluster retail sales have put the bears in control. I remain heavily bearish this market but expect choppiness to continue. Look for a two steps down, one step up pattern to develop over the next two months. Bonds have broken out to the upside as anticipated and I foresee a clear ride to 116-10 and perhaps to as high as 117 despite contradictory near term fundamental developments. The dollar has begun to test some potential support and the recent collapse of the Canadian dollar may provide a leading indicator to a strengthening in the U.S. dollar in the coming weeks. I remain a buyer of the dollar and seller of the euro, pound and Canadian over intermediate and long term time horizons.

Grains
Soybeans continue to impress as rising global demand for bean oil and signs of a soybean shortage in China take this market to new heights. I suspect that beans, albeit very pricey by historical standards, could easily gain 30% or more in the coming months as demand takes center stage in a market that has seen declining supplies due to recent acreage shifts.

Wheat caught a small bid as a freeze in Argentina's wheat growing region may have damaged a percentage of the crop. This market lacks recuperative fundamentals as the news of a shortage is built into the top that has already been set in the market.

Corn remains the big question mark. Strong technicals make corn worth looking at to ride the soybean train higher, but the fundamentals do not back it up if oil is in fact topping out. I remain overall bullish corn but recommend rolling into beans in its stead as the potential for volatility expansion to the upside in beans looks to out way that of corn.

Recent rain and flooding in Vietnam has devastated the rice crop there, furthering the Asian shortage and global demand spike for rice. This market is approaching some critical technical resistance on a long term historical basis but remains fundamentally strong and capable of making an epic move if this market kicks into high gear. If you can scoop up calls when Jan. hits 12.40 I recommend it as a good entry price.

Meats
Cattle prices have channeled near recent lows and remains bearish. President Bush is expected to meet with Japan's Prime Minister Fukuda to press the issue of removing Japan's age limit restrictions on beef imports. Hogs have offered some price support recently after blowing out just about every long in the pen, but I would wait for a close above 54.10 before betting the farm on the long side. Use calls as a risk defined way of playing a hog reality check back to the 60 area.



Metals
Gold and silver melted down as crude oil appeared to have topped and the U.S. dollar showed signs of price support. This market is volatile enough to set fresh highs if crude oil does the same, but the setup here is for a major collapse in metals in the next few weeks. Target $750 for gold and $13.50 for silver for the initial pullback. Copper inventories continue to rise in demand driven China and on the LME as well, setting up a copper bear move of historic proportions. Platinum is also a solid overbought short play here.

Softs
Coffee is seeing fund buying come back in after a strong selloff due to the end of drought conditions in Brazil's key coffee growing regions. This market is on the cusp of a major price expansion and I recommend long strangles here or directional bull call spreads. OJ is taking a beating but should catch a bid as drought conditions in California hurt OJ farmers who will use their precious water on other commodities before helping the Valencia oranges out. Call option premium is a bit overvalued here so look to go long futures with double quantity puts as protection. Cocoa is pulling back off of recent highs and is the typical choppy and volatile market that makes cocoa a great option market and not a good futures market in which to participate. Scoop up some straight calls on the cheap, but work tight limits as the floor is kicking out some wide bid/offer spreads at the moment. Cotton is a great call buying opportunity here as prices have pulled back to test some technical support above 60. Sugar is still finding some selling pressure after setting a double top at 10.50. That is, however, a target that the market will seek to retest sometime soon and sugar continues to represent an excellent opportunity for long term call buying. Lumber remains a value buy despite the housing turmoil.

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.