It occurred a few days later than expected but the week ended with significant bear turns in stocks, energies, grains and foreign currency. The dollar appears ready for further upside and the commodity markets could be in for a strong price breakdown this week ahead.

Energies

Oil prices are being inversely correlated to the U.S. dollar (trades opposite), and the dollar is reacting inversely to the stock market so one could make the connection that oil is trading with the stock market price action and this means a potential bear break in oil in the near term. $83.50 on the May Crude oil contract should hold as a high, with $85 being the ultimate price resistance for maintaining my bearish outlook. Natural gas remains a buy at these levels with straight calls.

Financials

A significant technical development in the S&P500 sets up the best structure for a market collapse I have seen in quite a while. Stocks have maintained a steady uptrend and I look for a few indicators of this type of action coming to an end. First, the velocity of the increase and the general intraday volatility should expand, helping to expose the buy stops and bring many buyers out of the market. Second, I would want to see an equal or greater level of volatility and speed of price action on the reversal, which appears to have started on Friday. Look for quick confirmation of the decline by Tuesday.

Bonds are a strong buy. The dollar remains a buy and Friday's price surge is a potential breakout indicator for the dollar.

Grains

As the prospective plantings report on the 31st edges closer I continue to see a short opportunity in soybeans and corn ahead of the numbers. A strong dollar doesn't hurt the bear play either. Wheat remains a value buy as a long against a short corn (1 to 2 ratio respectively). Rice represents a near term long play with stops a little bit below Friday's low.

Meats

Increasing cattle on feed supplies from Canada and solid profit margins on feeders will likely pressure cattle in coming weeks. Hogs are a sell for the week.

Metals

Gold and silver are being pushed around by any significant moves in the dollar. This correlation is strongest when the dollar makes sudden volatile price moves that force panic price reversals in precious metals. Copper is developing a sideways to bearish technical outlook with short futures recommended at current levels.

Softs

Coffee's rally attempts were thwarted by a strong Friday dollar rally, however the long term outlook remains fundamentally bullish enough to make days like Friday meaningless in the grand scheme of things. Cocoa remains a strong sell. Cotton continues to be a buy on dips with China buying and small planted acreage hurting supply. Sugar may have set a critical technical bottom last week and call options or long strangles are recommended short term. OJ is a major short opportunity with puts or short futures with stops above 160.

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.