Energies

Crude oil choppiness persists as rising tensions in the Middle East and weakness in the U.S. dollar is offset by production builds and a declining global demand outlook. Overall, energies remain a short using defined risk option plays as upside volatility spikes from Middle East related tension make exposed short plays not worth the risk. Natural gas remains a buy long term with deep out of the money calls to play a volatility spike.

Financials

The stock market's near term downtrending channel was penetrated to the downside as expected, suggesting momentum and potential volatility to the downside is increasing. I expect a major selloff to ensue in stocks over the next couple of months and recommend selling the bounces in this substantially overbought market sector.

Bonds remain a buy as the employment report is yet another confirmation that the economy is trouble. I wish they would stop referring to it as a double dip because to me the reality of the situation is that the economy has been in trouble for three years, only recently masked by the bailouts. The dollar is a buy on this dip, right here, right now. I recommend buying the dollar in tandem with a short stock index play, essentially spreading the two markets against each other (5 long dollar to 2 short mini S&P for example). The euro, pound, Canadian and Australian dollars are recommended sells. The Japanese yen remains a buy regardless of the recent 'no confidence' vote that failed, and I continue to standby my forecast that:

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

Grains

Continued weather concerns plague the grain markets as drought concerns in China could spell a demand panic in corn. Russia's lifting of its export ban for grains is a relative non-event, but shows the market's ability to self-correct supply/demand imbalances. I recommend put plays in corn, rice and soybeans with a corn/wheat spread (buy 1 wheat to short 1 corn).

Meats

Cattle is congesting but a worthy short, playing puts that have shed some of the recent volatility premium. I could see a pop to 107 but not much further. Hogs also remain a short as a perfect congestion pattern comes to a head this week.

Metals

Silver is building up to another run of downside volatility and I would not get caught up in this recent rally which seems like an initial value play by those either sucked out at the beginning of the crash or lucky enough to exit the market prior. Gold continues to remain choppy and I like strangles or straddles here in gold to play volatility with a put play in silver. However, I continue to recommend a bear play in gold long term. Copper remains a sell on declining growth expectations out of China.

Softs

Cocoa remains a strong sell as the market tests fresh near term lows and develops a volatile bear breakdown. Coffee is a sell off the recent bounce with bear put spreads. Cotton lacks a fundamental or technical reason to buy into this recent bounce, and I recommend avoiding this market outside of a put play which remains overpriced compared to volatility expectations near term. Sugar and OJ remain sells.

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.