Energies

Crude oil is going to be heavily dependent on the U.S. dollar as it is dictating foreign demand. Supplies are one thing, but a dollar rally is likely to thwart near-term supply concerns. The dollar bounced ahead of key trendline support and appears to be changing its very bearish trend to a potential bull run, which I expect will top crude oil and bring strong selling through the end of October. Natural gas remains a long-term buy with straight calls to play a volatility pop, and is a good spread against short heating oil (1 to 1).

Financials

Stocks are currently in an extreme overbought condition that lacks volatility or volume during this rally to indicate that it will sustain this move. I anticipate a selloff and in this week's Mound Trade Signals service I will be issuing a trade recommendation to play this forecast. Bonds remain weak and I recommend a deep out of the money put with loads of time on it. The dollar rallied above monthly trend line support and appears to have made a bull turn, although a quick test of last week's low is not out of the question. Regardless, I expect a dollar rally to at least 83. The Japanese yen remains a strong buy as the intervention did little to thwart the overwhelming global demand for this currency on the move. 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.

The Canadian dollar and Aussie dollar both made attempts at par against the U.S. dollar, but turned bearish with strong selling expected in both markets this week. Puts remain great play in the Canadian December option chain and I recommend straight puts to capitalize on the anticipated selloff. The euro and pound are strong sells.

Grains

Skyrocketing grains came as thin supplies threaten to cause global panic. A U.S. dollar rally could spell disaster for grains and the fallout from funds peeling off their longs could mean massive liquidation. This is the best shot I have seen to get short grains with straight puts and ratio put spreads. I expect strong selling across the board.

Meats

Cattle offered a bounce on Friday that I recommend selling into, as I expect significant downside volatility in the near term. Hogs continue to slide and the downside should have a bit more left to it.

Metals

Gold and silver are both worthy of short plays with put strategies. I anticipate a significant fallout in metals as long specs panic sell in what could be an historic collapse. Copper also represents a strong sell below the contract highs set back in 2008.

Softs

The entire softs complex, excluding lumber, is showing signs of impending weakness. Coffee continues to offer volatility in a choppy range, suggesting the market is susceptible to a dollar rally and bull positions should be limited. Cocoa is a strong sell with the market likely having established the high for the month. Cotton is an epic sell with an expanded lock limit reversal on Friday. The fallout there could be huge with forced liquidation possible. Orange juice appears to have topped, again, and is a sell with puts with a target of 110. Sugar is also a strong sell, sparked by U.S. dollar strength. Lumber remains a cyclical buy ahead of an economic turnaround.

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.