Energies
Energies offered a fairly technical trade this week as the market attempted to rally after a 15% retracement from the highs. These seemed like a clear dead cat bounce with a selloff eminent, and a Friday plunge offered some great confirmation. A break and close below $85 and this market could see a move down to $63 on a Fib. retracement fairly quickly. Heating oil remains a sell and a great short against a long rbob. Natural gas hit resistance below 8.50 and turned bearish by the end of the week. This market may be stuck between 7.00 and 8.50 for a bit.

Financials
Stocks got a strong boost from the 50 basis point cut by the Fed, but the inside language on the Fed cut implies the potential for a more stable interest rate environment moving forward. I expect a strong U.S. dollar, weak stock market and choppy bond market to become the norm for the next several weeks, if not longer. Bonds are pulling back on fear that they overshot the outlook for the Fed cuts moving forward, but the bottom line is that 118 or so is about right until the Fed gives a little more insight. Fade any attempt at fresh highs and be a buyer around 115-20. The dollar got a good looking reversal on Friday and should see some strength this week as the focus turns to Europe's interest rate policy. I would short the euro, Canadian dollar, pound and yen.



Grains
Soybeans are stuck between bullish South American weather and funds running for the exits. Pitch me bull arguments for the grain markets all you want, but history tells us $13 for beans is a place to be short. The same goes for $10 wheat and $5 corn. I would get into some intermediate- to long-term put plays and let the market shake itself out of this run - even if they take another stab at it come July.

Meats
The cattle numbers from the USDA said that there were 96.669 million head of cattle and calves in U.S. inventory (as of 1/1/08). This is down .3% from a year ago and in line with estimates. The market remains bearish while hogs continue to be a buy at these levels despite being just under some technical resistance.

Metals
If you woke on Friday you saw gold at fresh contract highs, took a mid-day nap and the next thing you know the market fell out of bed along with you. Gold and silver's reversal patterns on Friday offer a great technical turn for two markets that were way overbought. Sell into any Monday bounce and get short ahead of a U.S. dollar rally and oil meltdown.

Softs
Coffee is catching a solid bid on short covering and fund interest this week, with bull breakout written all over it. A word of caution, however, as when markets like coffee get up and go, it normally gives you the feeling that you are chasing the market with no great value entry point. That isn't the case right now, but that doesn't mean that it will fizzle out on this run. I would look for gap openings to the upside as a good confirmation that this market is about to begin its historical run to $2.

Cocoa is at fresh contract highs and about to go for the gold run to 2500 as dry weather in West Africa along with desert winds are placing stress on the crops. This is a short covering run that could go for some time, but I would play it with calls instead of futures because this market will have some wild swings.

Cotton volatility died down a bit this past week as it digests some serious recent price action. Don't be fooled as the market is going to get violent once again. I would buy some long strangles and play the volatility, or take advantage of the dip and start scaling into some long term calls.

OJ is on the move with market that shook off some bearish weather news setting up a bull run. Get long calls.

Sugar is not looking as hot as it did earlier in the week as it failed to break through 13. I would use that as a critical market and wait for a close above before jumping long. Otherwise some puts may not be a bad contrarian move.

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.