After a strong bounce back in the euro the week ahead sets up a pre-holiday congestion week. I believe the risk remains to the downside in the euro and stock market but overall I suspect volatility to stay in range and anticipate market congestion for a few days. Lumber's recent price collapse of about 30% in under 2 months suggests that the euro currency decline could have a horrific impact on U.S. housing demand. This leading indicator should not be overlooked - even if it is a temporary decline it remains a strong indicator of the types of economic problems that are ahead.

Energies

Oil prices continue to collapse as global economic woes abound. Declining growth globally, if realized for a period of more than a year from this point, could cause oil prices to spiral to $40 or lower. I suspect that buying bear put spreads during bounce days of $2-$5 would be a solid strategy. Avoid short futures for extended time frames because of the numerous long volatility spike events that frequently hit this market, especially heading into hurricane season. The oil spill in the Gulf continues to be of great concern, but short term this is unlikely to support price. Long term it could lead to a significant drop in potential Gulf supply if mandates and policy changes push suppliers out. Natural gas remains a buy on this recent pullback, but use calls to play the volatility spike as a bearish shake out is possible here if oil prices continue to slide.

Financials

Stocks were in panic mode most of the week as fears of an EU led global economic slowdown wreaks havoc on U.S. companies' recovery/growth forecasts. I suspect this week will offer choppy trade but overall I recommend selling into bounces to play a move to 1020 on the S&P. The dollar remains a buy, ignoring the late week rally in the euro currency as it is likely short lived. The reality is that there is little to instill confidence in the euro currency long term and rallies will be used as opportunities to liquidate currency holdings as a global shift away from the euro currency continues for months. The Australian dollar made one of the largest 5 day declines in its recent history and really has little holding it up from a run to 72 - yes 72. The yen remains a strong buy. The Canadian dollar is in a catch 22 with its upcoming BOC interest rate meeting on June 1st. Hike rates as expected and avoid inflation panic but destroy your economy. Do nothing and see inflation fears plunge the Canadian dollar to the mid-80s. To me the currency is a short with puts 6-9 months out.

Grains

Corn is catching some attention as concerns over China imports have the demand side salivating. I would not get too excited but this could artificially support price for a little while. My gut says it is a great entry for a short. Wheat remains a value buy and soybeans a sell from both a supply and demand perspective.

Meats

The price correction in cattle is on and I do not see an end in site - put buying is recommended. I suspect hogs are a buy here on a technical test of the lower part of an up trending channel.

Metals

Gold panic buying deflated a bit last week but the market is still exposed to erratic behavior. I remain long term bearish with little interest other than buying puts during days of volatility premium drop. Silver also remains stuck on gold's trend so puts are recommended there long term. Copper remains a sell on expectations of a drop in global demand.

Softs

Coffee is remaining impressively stable amid a dollar rally and forecasts for record Brazilian crop supplies. This forecast is hogwash to me and I believe coffee will hit 170 within a few months, therefore I recommend buying calls or bull call spreads on this recent dip. Cocoa is being supported at really the last remaining technical support area, mainly on a handful of bullish articles circulating that discuss poor yielding trees and rising demand/supply shortfall expectations. I call a spade a spade and to me this is a PR pump session that has little real merit - we are at some of the highest prices ever seen in cocoa and I could care less about the next 5 year outlook of declining tree production and rising demand forecasts - we are in a global economic panic folks and there is little argument to support these high prices in cocoa - I am recommending shorts with long term and near term put plays. Cotton remains a buy with technical congestion suggesting a breakout rally in coming weeks. OJ is a sell here with a high below 152 expected. Sugar is a buy on a dead cat bounce with a move to 1900 anticipated. Lumber prices have collapsed as the European walk out on U.S. home buying may set back the housing recovery by a few years. However, the massive decline seems excessive and a quick yo-yo move to 300 is possible.

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.