A holiday hiatus ends and 2011 begins with unbelievable prices in many commodity sectors. I believe this is sure to be the year remembered for the euphoria smack down - putting the big kibosh on the gains of 2010 in stocks and commodities. Get ready for a very volatile first quarter of trading in many sectors like softs and currencies.

Energies

Crude oil's slow uptrend has likely topped, well under $100, which was a critical psychological barrier. If this is in fact the 'turn' for oil then expect strong downside volatility mixed with congestion periods. I suggest looking at put plays now. The shift between heating oil and rbob may well be underway with enough room for that spread to go the other way - it is likely not too late to get on the long rbob short heating oil bandwagon. Natural gas remains a long-term buy with calls.

Financials

Stocks appear toppy and very overbought - I recommend getting short. The real question a bull needs to ask him/herself is would you buy here? Because if you wouldn't buy here then you perceive the market to be at fair or overbought value and therefore it becomes a sell. To me, anyone buying here is jumping on the bandwagon at or very near the end of the bull train's tracks. Bonds should bounce, supported by a selloff in the stock market. The U.S. dollar shot up to start 2011 and it is a trend I anticipate will continue, which is also likely to pressure the euro and pound. I remain bearish the Canadian and Aussie dollar. The yen remains a long-term buy, with bull call spreads recommended on dips. 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.

On a side note, I get copious amounts of emails from my readers thinking the yen is near 83 - this actually the inverse of the futures contract. The yen futures contract is near 120 (1.20 cents) and that means that the yen is equal to about 1.2 cents. The 83 number represents the inverse, or that it takes about 83 yen to equal 1 U.S. dollar. If someone is bullish the yen , that means they want that 120 number to go higher or that 83 number to go lower (meaning it takes less yen to equal $1 or that the yen is getting stronger against the dollar).

Grains

Grains have all made near-term bearish turns, or at the very least established a congestion phase on a technical level. It will be important for the bears to see momentum turn sharply for there to be legs to the selloff, and that catalyst may be handed to them on a silver platter with this week's WASDE report. The worst is over in Australia and therefore it is likely going to play out as a buy the rumor sell the fact situation in wheat. Look at put ratio backspreads to play the downside.

Meats

Cattle starts the year at epic price levels, and is at an area where I believe global demand will be affected to the point of a cycle shift in this market. I see an unlikely volatility explosion to the downside unfolding here in early 2011. Hogs remain a range bound market for the time being so not much to look at here outside of some potential weakness from a general commodity-wide selloff.

Metals

The turn in gold and silver may wind up occurring a bit later than I anticipated but the fundamental rationale for this collapse still exists and the longer it takes the more likely I believe it is to be a ferocious price plunge. The congestion at these levels appears to me to be a bear indicator as both gold and silver build up traction for a price plunge. Copper has the potential to be the worst hit of the group as funds have pumped money into this industrial metal as an alternative to precious metal investment, making copper perhaps the most overbought. If China growth takes a hit copper could see some extreme 'run for the exits' type of selling.

Softs

Coffee has begun a bear descent, and it should see a move to 180 in short order. Cotton also lacks momentum for further upside and I just do not see the spark left in it to suggest big gains ahead. Cocoa is holding up because of a wild political scene in the Ivory Coast, but this should be nothing new to long-time cocoa traders and I see it as an opportunity to buy puts at these levels. OJ remains in a bull breakout, but I believe upside is limited to 190 or less. Sugar has been a breakout bull market for some time, but when it turns I would watch out for a massive plunge to 2350. Lumber remains a cycle buy to 350.

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.