A two-day Fed meeting this week should be the catalyst for a negative outlook for the global economy as I anticipate the Fed to downplay recent bullish economic data.

Energies

Oil continues to congest around 70 while natural gas exploded to the upside, thereby tightening the excessively wide spread. Oil remains a bear play here with a move to 62 expected in the near term. Natural gas was a great bull play as it has gained over 50% in a matter of a few weeks. The market should let up under 4.00 on the Oct. contract and see a move back to 3.20, peeling off some volatility premium along the way. If the pullback occurs look to pounce on the dip with some straight calls or long futures.

Financials

Stocks appear strong but this week will likely be very deflating for the bulls as a top is set amid a negative Fed meeting and a poor new home sales number on Friday. I tend to get excited when I see formations developing and have a history of jumping in a little early, so it might take the week to wash out the bulls, but either way we are very close to a topping setup in the S&P and a bull move in the dollar and bonds. The Fed will need to downplay the economy to create the cautious optimism made famous during the Greenspan era. While the global recovery out of recession appears to be well on its way, we are about due to hit some big bumps in the road. The first bump is housing as credit remains tight and, without a 'cash for ugly houses' stimulus, the housing market may be in for an unexpected dip. The dollar, as I have made my views abundantly clear, remains very bullish and I expect a strong rally in the near and intermediate term. The Japanese Yen remains a long strangle play with continued volatility expected from the new government. This past week they actually suggested they did not believe in currency intervention, which is bullish for the yen if it is true (the Japanese government has tried to keep their currency weak to support their massive export industry) - but I am not buying into that.

Grains

Grains continue to offer strong sell indicators, both fundamentally and technically. Weather conditions are solid throughout much of the U.S. and the crops for beans and corn just seem too good to do anything but play the downside. Wheat is a value buy anywhere below $5. Rice remains a possible sell with July 2010 puts.

Meats

Cattle has begun what I feel is a strong descent to possibly the mid-60s. Hogs brushed up against anticipated resistance and showed some signs of topping, suggesting a possible short with a bull reversal above 56.

Metals

Why is gold trading below the highs but holding around 1000? There are a few schools of thought here. First, where else should you put your money - oil after it doubled, the stock market after a 60% rally off the lows or bonds offering minuscule returns? Second, maybe we are seeing some pre-seasonal buying ahead of a recession comeback demand increase expected during India's holiday buying season. Third, the recent dollar weakness could be pushing gold to test the highs. That being said, my school of thought is that what we are seeing is a jump the gun trade - ahead of a lack of India demand, oil pullback and dollar rally. Oh and let's throw in a stock market 10% pullback and Bam! Gold at 780. Silver at 11.00. Copper at 2.10. Platinum at 1080.

Softs

Coffee is hovering in a mid-range and has some bullish fundamentals developing in Vietnam but overall will have a tough time breaking out if in fact the dollar is going to make its move higher. The Vietnamese Dong also looks to be pushing lower against the dollar and that means some more coffee coming on the open market as Vietnam tries to push exports. Cocoa is riding high but remains a long term sell at these levels. Cotton is still a buy on low supply numbers expected from reduced planted acreage. OJ remains a buy on dips. Sugar is a congestion nightmare near some epic highs, with a potential for premium collection if the market stays stuck for much longer. My gut says there is still a downside play there, but watch out if those highs are broken.

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.