Energies
After the Katrina tragedy the energy market volatility spiked to a whole new level, forcing many bears into assisting in the panicked short covering rally that ensued.  The aftermath, which ultimately has left the market with a faster than expected recovery time and less damage to key offshore oil rigs, has essentially erased the surge in prices and left the market with quite the bearish tone.  While the potential certainly exists for additional problems and unexpected issues, including more Gulf hurricane activity, the market appears poised to have established a top and clear future resistance point in the market.  Natural gas offered even more explosive volatility and has established such extreme highs that one must question whether natural gas can even be used as a substitutive commodity if much higher prices are seen.  That said, some of the best premium collection opportunities I have ever seen exist in short term out of the money call options in natural, and one could even use the premium to create a synthetic OTM futures play by buying OTM puts with the extra premium.  With this kind of opportunity the exposure to extreme loss is certainly there, and one should be weary of playing any energy market without reasonable assets and deep pockets.

Financials
Stocks surged following the sell the news break below 1200 on the S&P and ended the week tempting the previous 1250 psychological front month resistance and nearing the 1255 technical resistance on the Dec. contract.   It is difficult to imagine that the retracement is over, but the momentum of the market certainly suggests it is.  I remain a cautious bear and suspect that if we break 1255 that a better entry point would be around 1270.  The bond market remains quite choppy, and its recent failure to break to new highs may be an indication of either a developing pennant or bear break - either of which means get short near 117.  The dollar broke through critical support and despite my views that it will be range bound through the end of the year, the lower of my forecasted range has been breached.  I find myself in a dilemma, both in my dollar views and in metals.  The bottom line for me is that I have quite well in the forecasting of these two arenas for several years, but I never based my predictions heavily on technical analysis, but rather an overall fundamental and cyclical view of the dollar.  While the U.S. remains vehement that they are not influencing the US dollar, we all know that at the every least things like the deficit and Fed policy shifts dollar action even if they are not directly moving prices.  The US does not want a weaker dollar, and the historic bounce on double bottom support at 8050 was a tell all that the market was heading higher and had reached a cyclical bottom.  Nevertheless the market is showing a severe retracement after surging some 12% and my best educated guess was 87 support.  We now sit here in the low 86 range and I suspect while my forecast was broken through we are in an important vicinity to support out.  I highly recommend buying the dollar, selling the euro and yen and taking advantage of the excessive retracement.

Grains
Sideways action in grains is helping to draw in those bull believers in to seeing support here.  Unfortunately I am bull that sees value and I just happen to be along for the ride.  Technically speaking beans are ugly and corn and wheat are showing better signs of support.  The gut says just buy Nov. bean calls and Dec. corn and wheat and be patient and be ready to reload if the timing is a bit off.

Meats
Cattle strength persisted and the whole meat complex is approaching critical topside resistance that either holds and sends these market down or breaks and gives these overpriced meat markets the chance to resume a bull rally.  As a long term bear I would be inclined to by cheap puts here but I wouldn't mind waiting it out for some confirmation before going all in with my chips.

Metals
Gold offered this committed bear little to happy about, as the market appears primed to test the contract highs.  Moreover, crude's 10% pullback, which should have put a damper on the bull run in gold, had little effect.  As I mentioned in the currency report above, I remain a steadfast bear gold trader, and you can send me hate mail all you want.  Puts are so dirt cheap that the best play here remains the simplest - buy Dec. puts on the cheap.  Silver is lagging gold and remains a good market to buy option premium or long strangles as we are at a point of low underlying volatility.  Copper is still a bear play.  Platinum is a short and palladium a buy.

Softs
Cocoa volatility spiked as the market dealt with Katrina impacts and the breakdown in the election scheduled for October in the Ivory Coast.  Overall this market appears to have set a bottom and is a buy even if you feel like you are jumping on the bandwagon a bit later than you would have wanted to.  Coffee failed to hold any post-Katrina strength, but the bottom line is that Katrina hurt coffee and the market will eventually benefit from the supply hit.  In the meantime, coffee still has a mean technical resistance area below 110 and I will be bearish until we break it.  Cotton is still a short.  OJ is taking too long to fail and is fast becoming a sleeper buy.  Sugar price support should fail next week and I suspect we will be below 10 before the month is out.  Lumber is a difficult call as demand will certainly pickup after Katrina, but the market never hit my critical 250 and has a bearish post-Katrina pattern.  I would stay away until we hit 240.

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.