Energies

Flattening supplies in crude oil and refinery rates remaining stagnant means the likelihood of a winter time supply shift increases - throw in the OPEC cut and this market sector should reverse when the U.S. dollar retraces in coming weeks. Straight calls and bull put spreads are recommended strategies.

Financials

The stock market established a critical technical and psychology secondary bottom and should see significant strength this week if the trend has, in fact, shifted to bullish. Bonds are now offering some decent premium collection opportunities as an intermediate term top and bottom appear to have been established. However there is some exposure to a test of the lows as the stock market may surge higher. Nevertheless, near term short strangles outside the recent range are recommended. The dollar did not truly regain bullish momentum last week despite catching a bid following the euro's island key reversal top established a week ago Thursday. This means a critical week lies ahead for the euro to run quickly to the 134 area and reinforce the short term bullish forecast. The yen could experience strong selling this week as bonds lack direction and the stock market catches a bid. The Canadian and Aussie dollars should see a fresh near term high this week.



Grains

Grain prices are on the rise as three dynamic fundamental shifts are about to occur. First we have drastically reduced cost of transportation which means a good chance for a spike in international exports. Second we are seeing lower harvest numbers due to reduced acreage from a recently revised USDA report. Last, but not least, a pause in the dollar rally will help relieve pricing pressure for a rise in international demand. While it is too early to tell the impact, the credit crisis should force reduced production in Brazil and some other affected countries. This is a great time to play grains for a winter rally and the current technical floor makes for a reasonable entry into some long call plays across this sector.

Meats

Cattle remains pinned to feed prices and an anticipated rally in grains should push cattle higher in coming weeks. Hogs are a buy as it supports near the low end of a wide multi-year trading range. A critical close above 58 on the Dec. contract should reverse the momentum that helped push prices down nearly 30% since mid-August.

Metals

Gold and silver have seen some price support as the dollar congests near recent highs. A rapid descent in the dollar should create a volatile spike in metals in coming weeks. Buy metals across the board.

Softs

Ivory Coast reports show reduced crop numbers amid growing destruction from black pod disease, but is this fundamental supply issue not only priced in but also offset by historically high prices? There is little that will support cocoa prices in my opinion, but the dollar pulling back is one of them. Let the dollar run to 82, likely popping cocoa to the 2300 area, then buy puts for another leg down. Coffee is a spectacular buy at these levels and should rise rapidly amid a weak dollar and harvest issues from Vietnam, which is getting pounded by rain and experiencing harvest delays. Cotton is overdue for a price correction as acreage numbers just do not match harvest forecasts. This is a market that lacks supply yet is getting crushed on price. International crops will likely be withheld from export in an effort to support prices. Sugar is building volatility and may make a run in coming weeks, but wait for a break above recent highs to push your chips into the pot. OJ is begging for a dead cat bounce since falling nearly straight down from 210 to sub-80 prices. Buy the value. Lumber remains a cycle low technical buy, supported by a possible trend shift in new home construction in coming months.

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.