Energies

The energy markets are caught in a virtual tug of war at the moment between what is and what may become. With DOE inventory numbers showing Crude and all of its products in plenty of supply as compared to the past 5 years, many traders are struggling to justify Crude trading above 6500 on Friday's close. Essentially we have seen the current domestic supply figures only shift focus to the global picture rather than turn the market downward in a convincing manner.

The Iranian standoff with the U.N. at this point has cooled somewhat but neverthless has the potential to get very ugly, very fast. The smart money in this market knows they don't want to be on the short side with a potential time bomb like that one ticking in the background. Others in the supply chain are also on shaky ground with the Nigerian supply continually disrupted and Venezuealan rhetoric that never seems to go away.

For those of you who think winter is over, think again. Last year the market rallied on a cold snap as late as March and as much of a no factor as weather has been this year it would only be fitting that it come into play late in the season. There are plenty of forecasters predicting a return to colder temps this month and that may be enough to disrupt the recent supply picture just enough to get traders on the defensive.

Natural Gas marched towards its recent lows but was stopped short by inventory data that suggests we might not be out of the woods yet as cooler temps are expected over the next few weeks. I'm still calling this market oversold and a buying opportunty here with an upside target of 1100.

Crude Oil still hasn't broken down through 6300 yet which has been my turn around point for some time now. However, the market failed to push through 6920 this week which shows some weakness on the technical front. I expect to see some consolidation here between 6400 and 6700 over he next week. At least this has created some cheaper buying opportunties with reasonable stop loss orders at 6300. Buy dips to 6450 with protective sell stops at 6300.

Financials

Stocks
Stocks broke down late in the week as we expected. This weeks downside target on the March Dow futures contract is 10,680. This is a previous support level that I expect to see tested this coming week. After a brief bounce off of that level I expect to see a continued sell off, carrying the Dow to 10,500 within the next two weeks.

Bonds
Bonds had a wild day today. This feels like the beginning of a rather large move. I continue to favor the short side and expect to see the March 30yr T- Bond contract to trade below 112 this week. Today's jobs data, while a bit of a surprise, was not enough to reverse the overall trend lower.

Metals 

Metals overall remained strong this week. Silver is showing signs of a temporarily overbought market. I expect to see a correction in metals this week. Silver could test 9.25 on the March contract. Gold could test 540. Platinum could test 1025. Long term holders should have stops below these points, short term traders should have stops below this weeks lows. I hope some of you went long Palladium with me last week as this market really took off. I have mentioned in the past that Palladium often lags the rest of the metals for quite a while, only to then stage a late catch up rally which is also many times a confirming sign that the rest of the complex is nearing a temporary top. Overall I must advise caution. But this next dip when it comes is going to be a great buying opportunity, as long term, I remain quite bullish on metals.

Grains 

Grains did end the week strong. Wheat tested 360 on the March contract and continues to be the leader. Corn was able to break out above 220 and the next target here continues to be 232 on the March contract. Soybeans lagged corn and wheat but look for some strength here this week that tests the 625, possibly 650 level. Bean oil is leading the bean complex and should test 2350 this week. Oats should be above 210 by the end of the week.

Meats 

Live and Feeder Cattle still have quite a bit of downside potential over the next week. Sell bounces with two point protective buy stops to stay in.

The Hogs and the Bellies should consolidate here over the next week as they have roughly reache dtheir seasonal price band.

Softs 

OJ Continued higher and could find resistance at 127.50, but it's not likely. The trend seems strong and 130 is my target for this week. Cocoa maintained a tight range between 1450 and 1500. I do not expect this range to hold this week. A downside breakout seems more likely than an upside one. Coffee did consolidate this past week as we expected. I continue to be a bull and this past weeks correction should have been enough now to resume the uptrend, look for a push back above 120 this coming week on the March contract. Despite lower energy prices, sugar made new highs. A test of 20 seems like a foregone conclusion. I continue to hold puts waiting for a correction that seems inevitable, but has yet to come. Cotton pushed to new highs and may yet make it to 59 cents before the end of the week, but I am not holding my breath.

Currencies 

EUR/USD
Today's Jobs data was a bit of a surprise and did push the Euro slightly below 120. I will look to see if today was just a one day out lier or a real change in trend. If 120 proves to hold, which I think it will then I will get long again with trailing stops starting out below todays lows (119.69).

USD/CHF
My short trade from last week was short lived. For now I will stand aside but continue to favor the short side and will be looking for the next short opportunity.

GBP/USD
176 buy orders filled today, stops working at 175 currently. I will move my stops up to my entry point if the market moves at least 50 pips in my favor and then trail the stop by 50-75 pips from there.

USD/JPY
Got stopped out at 116.75 on Tuesday with a 97 pip profit. Too bad though since the market really took off from there but I will not complain. I see continued strength here and will buy the next dip we see.

AUD/USD
Got stopped in and out of this market this week. Still very much favor the long side and will re-buy long at 7500 with stops starting out at 7425 and then trailed by 75 pips.

USD/CAD
Got stopped out and will stand aside for now.

Risk Disclaimer 
Past performance is not indicative of future results. Trading futures and options is not suitable for everyone. There is a substantial risk of loss in trading futures and options. 

Matt Odom is the Managing Partner and Energy Analyst and Derek Frey is Head Trader at Odom & Frey Futures & Options.