Energies

Crude Oil finally broke resistance at 58.30 this past week and has begun its march lower. The next level of support shows up at 56.34 and should be tested ahead of the next EIA inventory report on Wednesday. We are currently holding Puts for February and will probably hold them until we see trading closer to the 55.00 mark.

Heating Oil showed some independence early on after the inventory data reflected a slight draw on Distillate supplies in the place of builds that were expected by most analysts. That independence was short lived as the Natural Gas inventories came in very bearish on Thursday and temperatures across the map continue to be more like spring than winter.

While the picture may seem bearish across the board, upon closer inspection the numbers spell possible trouble down the road. For instance the Demand for Unleaded is back on the rise in a big way with prices falling over 35% over the past few weeks. Meanwhile we are receiving record imports of refined product, this will eventually stop and we will resume normal import levels and limited refining capacity. Then there is the reality that winter is on its way no matter how late it is. When the temps drop it will be interesting to see how the market reacts considering the current supply levels and the governments commitment to release strategic Distillate reserves if necessary. I personally think this is a market that may be suffering from speculator and media exhaustion but can't resist a rally on any Bullish news.

Financials

Stocks
Stocks rallied most of the week mostly due to softening energy prices.  We went right through my 10635 resistance point this week and now my next target is 10,743, then 10,780.  I do think this rally will either stall or at least pause before rallying above 10,800 if it can get that high at all.  If you are still on the side lines what are you waiting for?  This is as good as it gets in terms of seasonal trends that one can rely on!

Bonds
Bonds have, after making a nice attempt at a break down, come right back to where we were before the last Fed. Meeting.  I do expect to see at least a two basis point move this week but it is the direction of that move I am unsure of but I am biased to the upside.

Metals

Gold and silver managed to rally together most of the week.  Gold seems to have bottomed but if interest rates start to fall again, like we saw on Thursday, then that could spell the end in the short term for Gold.  Overall I still think we have at least a 65% chance of hitting $500 before the New Year.  Silver too could see a run towards $8.00 but first we need to be sure that we can at least get and hold above $7.75 Copper broke out as I expected and is now on its way towards 200.  Seems crazy that it has gotten this far but one cannot argue with a trend or momentum.  Platinum has broken out to the upside and could find its way above $1000 very soon.  Palladium is now finally playing catch up to the rest of the metals and this too should continue higher. 

Grains

Well I am going to go long March wheat this week.  Any buys below 330 should do well.  I am also glad to see beans back over 6.00 but we really need to see that hold as support now before getting too excited.  Overall I will begin to pay grains more mind now that we are starting to see some movement.      

Meats

Live Cattle traded through resistance on Thursday and broke a high of 9310. By Friday's close however, it was trading down on the week at 9045. This market has shown great resilience in the face of seemingly unsustainable rallies, admittedly I have had a hard time believing the continuing bull market for the whole complex. That being said there has yet to be a break in trend for the Live market. So to expect anything but higher prices from here would be contrary to the evidence.

The loss of the Canadian imports due to MCD has made an almost impossible market out of an already tough NY pit.

Softs

OJ seems to have stalled but is not likely to really breakdown much below 115.  Cocoa continues drift and is still not showing any signs of life.  As I mentioned last week Cocoa usually has a seasonal rally this time of year so buying near the money calls is the safest way to catch that rally if it ever comes.  Coffee's rally seems to have slowed but I still expect a move above 110 near term.  Sugar continues to drift but with lower energy prices I would be buying puts here as this market is still very top heavy.  Cotton is basing and we should start to see a rally this week.

Forex Currencies

EUR/USD
The Euro continues to run lower.  Support levels have not held and I fear we could see a rather strong sell off this week if the dollar remains strong.

USD/CHF
The Swissy remains strong and I still bet my target of 132.50 will be hit this week.

GBP/USD
The pound continues to hold support, unlike the Euro, and stay above the July lows.  If 172.73 support is broken then look out but that does not seem likely.

USD/JPY
The yen is stalling out around the 118 handle and I expect this market to go sideways for at least the next week or two before resuming the rally.

AUD/USD
I continue to hold my shorts here with a target of 71.00 near term.

USD/CAD
The Canadian is moving rather slow but is maintaining its upward trend.  120 is still the target this week.

USD/MXN
Peso continues to slide lower.  I see nothing stopping this market from testing 10.60 near term.

Matt Odom is the Managing Partner and Energy Analyst and Derek Frey is Head Trader at Odom & Frey Futures & Options.