Energies

The Bull trend continues for Crude as the concerns over immediate supplies for the winter seem to dissipate and the focus shifts to the geopolitical picture of the future. The current situation in Iran is becoming quite the standoff as the Iranians continue to shrug off threats of sanctions by the UN Security Counsel and seem content spinning the proposed action as an attack on young Iranians.  

Iran is not the only concern as Russia and the Ukraine came to proverbial blows over an energy agreement entered into previously that tripled the price paid by the Ukraine for Natural Gas beginning in 2006. The Natural Gas pipeline used by the Russians to export to the rest of Europe runs through the Ukraine, thereby raising concerns that they were stealing everyone else's share. There were subsequent reports of shortages in neighboring Serbia, Croatia, Hungary and Slovakia. However the disagreement was settled this week supplies for the rest of Europe seem to be back on track.

While these are not the only issues at hand they are indicative of what the market seems to be focusing on at the present. Add to these the prospect of new leadership for Israel amidst the recent illness of Ariel Sharon, and the uncertainty mounts to a level that is very uncomfortable the bears in the energy markets.

Based on this past week's consolidation I'm looking for the Crude Oil market to remain at the least supportive as we trade through the rest of January. Any break above 65.10 on the February Crude contract would be a strong buy signal. On the other hand a move below 62.85 would be a signal to take the other side.  

Heating Oil prices should continue to drop this week as refiners begin to liquidate supplies over the next few weeks before the winter has come and gone. Unleaded looks technically strong and may be bolstered if supply numbers begin to slide. Nat Gas seems a little3 oversold here and I expect a short term bounce back to the $10 range over the next week.

Financials

Stocks
The January effect seems to be waning. The turn I mentioned last week seems to be happening. I expect to see this market start to break down this coming week. Buy or spread puts and tighten stops on existing longs. My target on the S&P for next week is 1275.

Bonds
After spending most of the week pushing lower, Bonds turned and had a very strong Friday rally. I view this as a final shake out before turning lower again next week. I am a happy seller on anything above 114-15 on the March 30 yr Bond contract and my target for next week is a move below 113 with stops just above 115.

Metals 

Metals continue to be red hot. Gold reached and even exceeded my objective of 550. Silver fell a little short of my 950 objective but was still very strong. I continue to favor the upside even though I am concerned that a shake out on the down side could be coming. Keep stops tight and be ready to re buy lower if stopped out. I continue to stand aside of copper, I wish I had more to say about this market but I really don't. Platinum and Palladium had a great week as well. Platinum really took off and is now just shy of 1050. Look for continue strength here as well, but keep trailing stops tight.
 
Grains

Grains spent most of the week selling off in anticipation of the report. Friday's afternoon rally looks like the slide is over now for real and we should start moving back up all of next week Wheat is likely to be the strongest in the near term but I still expect to see Soybeans rally well above 675 before the end of February.

Meats

Well we finally saw the effect of slowing demand for the Hogs this week as it closed roughly 6.00 lower on the week finally coming to rest at 59.00 for the February contract. This was long overdue but slightly overdone. Expect this market to stage a dead cat bounce her over the next week before we head any lower. 61.00 would be a decent entry point for the late comers with stops above 62.00. The rest of the complex (especially Live Cattle) is a sell at these prices as long as your selling limit orders into a bounce.

Softs

Oj continues to drift and for now lacks conviction in either direction. I continue to favor the short side but will look elsewhere for better opportunities. I am still uninspired by the bull camp in Cocoa, however if I was forced to take a position in this market I would prefer to be long around 1500 with a stop and reverse order placed at 1469. Coffee continues to be strong. Next upside target is 126. This market could see a shakeout as well so tight trailing stops are advised. Continued strength in energy continues to support sugar. Holding sugar puts has done me no good so far and I will be exiting them on Tuesday. Cotton continues a slow churn higher and I do expect to see a push back towards 60 before the month is out.

Currencies

EUR/USD
The Euro was pushed down mid week due to the ECB standing pat on interest rates, but recovered nicely by the end of the week. I expect to see 122 taken out on Tuesday, and then a push towards 124 from there.

USD/CHF
I continue to be short and my objective on those shorts remains at 125.

GBP/USD
We continue to be long, stops have now been moved up to 175, and my objective remains at 179.

USD/JPY
Shorts are still on, stops working at 115 with an objective of 112. If you are not in this market any shorts you can put on above 114 should fare well.

AUD/USD
This market has formed a nice bull flag and I am now long from 75 with stops working at 74.50. Objective is 76.

USD/CAD
Still flat this market for now, but i continue to work the following orders, buy on a move above 117.55 and a sell below 114.28.

USD/MXN
Still short this market. Stops are now working at 106500.