Energies
A strong break in energies came on the heels of a monstrous bull surprise in the weekly inventory data.  Most interpreted the sell the news affect as the market establishing a psychologically acceptable top.  The majority of analysts pulled back their bullish near term views as it appeared a technical top was in.  Then Friday sent us all going into the weekend with a big double take as missiles being shot at ships and oil production concerns in Nigeria and Ecuador heightened geopolitical concerns.  If inventories can be ignored like that and the market can be this volatile, then it could easily revert to new highs without much of a second take.  But us bears like to look at every selloff as the signal of a top.  I may be a bear, and I may look at these prices with absolute astonishment, but the top may not be hit.  In fact, it may be a ways away.  Nevertheless the right strategy remains selling call premium on rallies and buying bear put spreads on the cheap.  Natural gas inventories told a different story this week and may diverge from the other energy markets as the excessive premium built into the market may dissipate. 

Financials
Stocks continued to show weakness this week despite a crude relief selloff and is below critical support.  Talks of ‘quiet buying amongst funds' on down days this week is a bunch of hogwash.  What the heck is quiet buying anyway - do they whisper their bids?  When large volume rally days hit the market then you know there is fund buying, otherwise the market is waiting this bear break out to see how far it can go, and if you look at a chart it has a ways to go.  Bonds remained strong throughout the week and seems to be trailing away from the lows.  I would be shocked if the lows are in, but the market is certainly acting like it.  I would walk away in the near term if the 30yr can close above 117-16, otherwise remain short.  The dollar strength just around 87 is in line with my range bound forecast for the remainder of '05 and I suspect we will see choppy action as the market slowly runs up towards the highs over the coming months.  The yen is set to establish fresh lows.  I am not a fan of trading ultra thin currency markets but you may want to look at a short play in the Brazilian Real.

Grains
Grain weakness persisted, as wet weather and declining seasonal concerns set the stage for a questionable harvest.  Look for strong counter-seasonal support to develop as major growing regions experience worse than expected harvest conditions in the coming months.  This means developing long corn positions now, beans in a few weeks and waiting it out for a few months.  The value is too good here when China demand is still a relative unknown.  Rice is still a buy.  Wheat found support this week on better than expected demand news - a trend that should be prevalent throughout the grain complex as the year progresses.

Meats
Cattle strength heading into Friday's after the close cattle on feed report appeared to be dead on.  The numbers came in at 10.092 million head and the number is bullish on the forecast.  This may be a case of buy the rumor but sell the fact and we may see a surprising correction next week.  If Monday opens high I am a seller.  Hogs remain a breakout buy, and bellies should follow along for the ride.

Metals
Gold weakness came on dollar strength as the market once again jumped the gun on the dollar breakdown.  Look for continued failure in gold and silver over the next several weeks as the market realizes the dollar support is real.  It is critical that we break this past week's lows in gold by mid-week next week to continue downside momentum.  Silver volatility is dead, but this market has a history of reviving itself in a hurry, so I recommend buying puts.  Copper appears to have set a key reversal top and should see strong selling near term.  Platinum remains a sell while palladium remains a value buy.

Softs
Coffee's failure on surprisingly bearish crop news from Brazil is just the beginning of the problems in this market.  We are coming out of frost season unscaved, the Brazilian Real looks ugly and the chart has one of the strongest resistance lines I have seen in any market in a while.  It appears the squeeze is over and the market should prepare itself for an ugly battle.  Until we break 110 I am bearish - despite my long term views that higher price extremes are in this market's future.  Cocoa remains quietly bearish with the potential for bull spikes on pre-election news from the Ivory Coast.  Cotton is still a sell.  OJ is showing signs of failing, but the odds of revisiting the pricing of a year ago is unlikely and support should develop above 80.   Throw in worse than anticipated Florida inventory numbers and potential tariffs on Brazilian OJ imports and we may be entering a contrarian buying area.  Sugar still has more downside potential but I would have suspected a more volatile retracement over the past week and am lightening up my sugar shorts and puts to a less exposed level under the current setup.  Lumber is getting very close to my long term target of 250 and I would be ready to buy calls if we break below.

James Mound, owner of JMTG Brokerage LLC, MoundReport.com and author of the book 7 Secrets, writes the Weekend Commodities Review Newsletter. Receive your free weekly subscription to the Weekend Review by e-mail. Click here.