Energies

Despite the Texans having to move their football game with the Ravens to November, there was a lot of grateful Texans after Ike passed through with less than anticipated devastation. Oil supplies will experience a bit of a drop, mainly in distillates, but this storm sets up yet another pullback in oil prices this week. Expect 92.70 to get tested fairly quickly and ultimately for the market to support out between 88 and 93. Natural gas will also see a bit of pullback that should be bought into with bull call spreads. It is also a good time for a long heating oil short rbob spread (1 to 1).

Financials

So Merrill Lynch dropped the bomb this weekend with a buyout from Bank of America coming on the heels of a Fed intervention of sorts. The stock market is running on zero consumer confidence, and now has zero fund manager confidence to boot. This may get a bit ugly in the short term, but let them wash out the faint of heart because the market is near a bottom. Bonds should take it to another level but be tempered by the Fed meeting on Tuesday, which is setting up a big turnaround in both stocks and bonds. The dollar is riding high but is about to turn south in the near term, sparked by Friday's strong euro rally. Look for a move down to 77 before jumping long once again. The yen is trading almost entirely against the carry trade so look for some selling pressure as bonds turn south and the stock market rallies in coming weeks and months. The Canadian dollar is due for a bounce, but it will likely be short lived as the ultimate market move is probably to 82, albeit a year or two from now.

Grains

A bullish crop report set up a nice limit up move in corn on Friday and solid bullish action throughout the grain sector. This sector is likely to rally in coming weeks, especially during a critical harvest and weather period. Target bull call spreads in corn and wheat, but shy away from beans as they are a bit overpriced at the moment.

Meats

A rally in grains is likely to setup a bull swing in cattle prices over the next few weeks So take off the shorts and reverse this market sector to bull side in the short term with straight calls.



Metals

My targets of 740 in gold and 11.00 in silver were essentially hit last week, and these two markets are a value buy in the short term as the dollar is expected to pullback. Straight call plays are too pricey so look at long-term wide bull call spreads in both markets, about 50% away from the current price with 12 months or so of time.

Softs

Cocoa is holding a bear trend despite an ongoing strike in the Ivory Coast and poor quality beans arriving at port. This sets up a bear break once the strike ends and puts are recommended on up days. Coffee is having a tough time breaking out as rising supply estimates for the 2008/09 crop hold back the bulls. This market will continue to see short-term pressure if oil falls further. Buy the dips with long term bull call spreads. Sugar remains choppy and bearish as oil falls and India cash prices continue to falter. Expect the market to offer a final shakeout and then turn bullish as corn makes a harvest-time rally. Cotton caught a strong bid on the crop report from Friday and should see substantial gains in coming weeks and months. Futures with put protection are recommended at this value entry price. OJ remains a value buy despite ugly technicals.

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.