Energies
The first drop in crude oil inventories in months combined with a no action OPEC meeting surged oil prices to over $105. A weekly chart shows that consistent fresh highs throughout this historic run are followed by major pullbacks, triggered after a 6-10% move above the previous highs. Expect selling pressure to come in early this time around and to signal a shift in the technical trend for the rest of 2008. Technically, an early top would provide momentum to the downside to put in a longer term top. I suspect, as fundamental supply side overload changes market sentiment that the oil market is near its high for the year, and perhaps for the decade. This is an opportunity to stock up on some long term puts, going as far out as a Dec. 70 put and leverage against a dramatic fall and a premium increase on downside volatility spikes. Natural gas clearly broke through 8.50 resistance but needs a supply change to make the market vulnerable to the upcoming hurricane season.

Financials
Stocks continued to slide on interest rate and economy fears. Employment numbers on Friday showed the biggest drawdown in five years and the Fed's plans to add liquidity to the market is a signal of a confirmed recession. This is not news to me and should not be news to you. The question that should be asked is whether or not we are heading into a depression? If not then the market has historically turned bullish at the earliest signs of a turnaround, which could still be years away. The key to supporting the stock market is a support in the U.S. dollar, something that appears to be seriously lacking at the moment. The bond market is choppy at best and selling premium is still recommended as premiums are the highest in years and the market appears stuck in a 6-8 basis point range. The Canadian dollar is likely to turn as crude oil establishes critical highs and gold pulls back off its extreme levels. Canada is expected to push interest rates lower in an attempt to deflate its currency as the country's ability to export is becoming slim to none. The chart on the euro is hard to argue against. The market had its typical retracement of about 6% and has resumed its rally to fresh all time highs. Nevertheless, the European economy is stuck in a global economic downturn and a huge export drop. Take the fresh high in the euro and buy some straight puts for a clean ride back down to 146, and ultimately to the 132 range. Expect a downturn in the pound this week as horrendous weather plagues the country mid-week and damages day to day impedes operations.

Grains
Finally some topping patterns were seen across the grain spectrum this week as profit taking ahead of the plantings report at the end of month begins. Soybeans may appear the weakest, but wheat is the most susceptible to collapse as it pauses its incredible run of volatility expansion to digest some selling pressure. The impressive part of the bean selloff on Friday was lock limit down most of the day, but watching front month March trade down over $1 on the close as it was trading without a limit. Rice even saw a bit of a top as it broke back through gap support. While the world is clearly in a grain crisis and overexposed to the upcoming growing season, it is also at historical price extremes and due to see a significant price correction.



On a side note, Zimbabwe chimed in with the first signs of corn supply issues for the upcoming crop year as over 80% of the crop was planted late, setting up a potential net import situation. This may be a sign of things to come, but overall I expect to see record corn acreage corn as the crop to short heading into the critical acreage report. Before we get to the acreage report we must first make it through Tuesday's WASDE and crop production data, likely to be a catalyst to further grain selling.

Meats
The USDA reports all time record highs in red meat production in 2007, up 2% from last year. Totaling 48.8 billion pounds, meat supply is high despite a lack of fat cows due to spiking grain prices. The market is clearing out supply due to rising costs, leaving the market susceptible to shortages in coming months. Corn needs to fall to save this sector from a problem.

Metals
Gold hit a brick wall in its approach of the critical $1,000 mark, and electricity relief in South Africa and an end to U.S. dollar shakeout will put the kibosh on the gold run. Within two weeks the electricity issue that has plagued the platinum and palladium mining in South Africa will see 50% relief and if all goes well 100% relief within two months. This is critical to gold as well since gold mining in South Africa is big business. Platinum tipped over on the news and will bring the metals sector down for the ride. Copper is in a supply problem all its own but $4 remains a critical monthly chart resistance area that should hold up on a month end closing basis.

Softs
Coffee plummeted on news of revised Brazilian crop estimates suggesting a 15% increase to over 50 million bags because of favorable rains and fertilization techniques. The late flowering due to drought earlier in 2007 appears to have not affected yield, at least according to forecasts. An extra 10 million bags does not make this market whole, but it will certainly go a long way to diminishing the strength of the bull run we are experiencing. I buy this dip as the Vietnam crop is garbage and the Brazilian crop is not harvested just yet, so I would not count on the final numbers coming in above 50 million just yet. This is the catalyst the market needed - a healthy pullback and a setup for a fundamental surprise come harvest time. Buy the dip at 1.40 with some July bull call spreads.

Cocoa may have topped as the market is finally seeing some profit taking. Friday's late day recovery may give the bulls an excuse to buy on Monday, but I would pick up puts on any bounce as the market is due for a significant correction on a technical level.

Sugar prices tumbled as funds walked with profits and the market was spooked by some stop triggering profit taking. India's early ending of its subsidization program is bearish for the market. At this point it might be wise to take profits on bear plays and look for value entry to a longer term bull play, otherwise find another a market to trade.

Cotton is in overdrive as a v-shaped correction on recent limit up action has the market limit down for multiple sessions. All this before the acreage numbers at the end of the month! A lack of acreage due to a migration to other grain plantings has cotton traders thinking major shortage. I am one to agree but let the selling ride itself out before getting long for the stretch run.

OJ is getting very choppy after failing to break through resistance. The market is stuck for a bit, but I am buying the dips ahead of the hurricane season. Long futures with put protection is not a bad way to go.

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.