Energies

Crude oil prices slid last week, as anticipated, with more downside ahead as long as hurricanes continue to be a non-issue. There is still an opportunity to play a bear move in oil and I recommend bear put spreads or ratio put front spreads to capture the downtrend. Natural gas is a long term buy, despite near term technicals looking quite ugly. Buy heating oil against a short rbob (1 to 1).

Financials

Stocks continue to show signs of weakness and the potential for a volatile failure. Bonds have rallied significantly as the Fed moves to buy back bonds. Overall I do not expect the market to truly test the 2008 highs and therefore anticipate a top between current levels and 138-14 on the 30yr. In this week's Mound Trade Signals premium report I will release a trade recommendation to play this downside - to see the trade alert you can subscribe by clicking here. The dollar remains a buy after developing strong support. The Australian dollar still needs to break 8780 to confirm a downtrend, but that is likely along with some serious volatility as a hung parliament (the first in 70 years) from this weekend's elections puts the country in a bit of a panic. The Canadian dollar is range bound, but I continue to be bearish long term. The euro and pound are both shorts on dollar strength. The Japanese yen is pressing up against recent highs as it makes a push to test the all-time high levels at 125. While a bullish US dollar forecast should theoretically slow the yen play, I do believe they can both rally in tandem and offer a price breakout in the yen. I continue to stand by my forecast that:

The Japanese Yen futures will hit 140 before 80 or I will quit writing the Weekend Commodities Review.forever.

Grains

Do you find yourself cheerleading a grain rally? After all, grain prices were relatively stagnant for some time and there are some serious fundamental reasons to be bullish. There is the Russian drought and wheat ban, the growth in ethanol demand for corn and the potential for China to step in and be a corn importer. However it is not what we know or expect but rather what is priced in and what will ultimately occur that matters. The worst of the Russia wheat crisis is likely over. Rumors of China needing to import corn is, shall I say, unrealized. The USDA's report of spiking ethanol demand does not take into account one-time factors or seasonal demand that may have created an imbalanced outlook. The bullish news is behind us, and without further credible fundamental news the grain sector is likely to see congestion or downside ahead.

Meats

Cattle prices surged last week, sparked by cash buying ahead of Labor Day's anticipated demand spike. Pork bellies offered a front month all time record high, although this is misleading as back months were nearly 30% below this price. Meat prices as a whole are nearing market hysteria buying levels. Utilizing long puts I believe this represents one of the best reversal plays I have seen this year. Start scaling into long term put plays - early 2011 - and use this volatility expansion to play what will likely be a sharp price decline once the short covering panic subsides.

Metals

Gold's declining volatility is combining with a mild uptrend and relatively low volume to ultimately set up a strong price decline over the next two weeks. I anticipate $40 down in gold with silver down over $1. Copper should sell off on different merits as global growth fears damper the copper demand outlook. Strong sells are recommended across the metals sector.

Softs

Coffee's breakout last week does not appear to have legs to me, and therefore a near term profit grabbing opportunity exists on longs and a possible short to 170 is worth a look. I would recommend selling anything between 185-196, above which the market would regain a bullish technical outlook. Long term, coffee remains bullish with a buy in the 170 area recommended on the dip. Cotton has developed a bull flag on a daily and that compliments my longer term bullish stance - buy the dip. OJ remains a sell. Sugar is also a sell with a dead cat bounce top likely in place. Lumber is starting to pickup momentum and I expect a bull run here over the next couple of months. Cocoa is on the cusp of a massive technical failure but has two critical support levels nearby that need breaking in order to confirm the failure. First the market must break last week's low this week, a seemingly easy task considering we settled 22 points from that mark on Friday, but nevertheless absolutely critical. Second, cocoa must penetrate the bottom support low of 2761 on a weekly chart prior to penetrating 2948 to the upside in order to establish confirmation of the downside momentum. I believe both of these supports will be penetrated this week and a quick move to 2620 is likely. Even more downside below that first target is expected longer term.

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.