Energies

We finally caught a bounce late in the week on the energy front but not before sliding to 2 month lows ($57.55) in the Crude Oil market. This has surprised many analysts, including myself who expected the market at the very least to begin consolidating over the last week or two. Apparently the current supply numbers are enough to override the geopolitical and longer term supply/demand worries as we creep towards the end of winter.

Looking at the daily chart for Crude Oil we have broken through some key levels of trend support and while the monthly chart doesnââ,¬â"¢t look much better we would still have to break down below 5700 to get the Bears overly excited. This past week has shaken out a lot of longs and put the smaller spec on the sidelines with volatility up sharply. Crude was up on the close Friday as it approached $60 once again but failed to get there. There were a few things traders could point to as catalysts for this latest rally and while most would consist of weather and geopolitical concerns I think itââ,¬â"¢s fair to say that the market probably needed a rest from the steady downward march and found a dead cat bounce to be in order.

This market still reeks of a buying opportunity down here to me. If you think Iââ,¬â"¢m stubborn then at the very least, youââ,¬â"¢re paying attention. Not to say this has been an easy couple of months for Bulls in the energies but to decide now that the Bear market is here based on $59 oil and a rosie couple of months worth of DOE data would be foolish in my view. The fact is that we have a reprieve at the moment based on a record warm winter and good import numbers and no major disruptions from abroad. To think that a return of regular seasonal demand and a couple of serious disruptions in the supply chain arenââ,¬â"¢t around the corner would be an overly optimistic viewpoint in my opinion.

Weââ,¬â"¢re taking a long position via bull call spreads with options this week on Crude and using a butterfly configuration to construct a bullish trade on Nat Gas.

Financials 

Stocks
Stocks managed to push higher this past week rather than lower. I will continue to favor the short side via puts but quite frankly I am just not impressed by the action we have seen in the indexes these last few weeks. The market seems tired and unwilling to breakout and follow through.

Bonds
Well bonds broke down below 112 like I had hoped but just barely and they did not manage to close below 112 which is what I was really looking for. Todayââ,¬â"¢s PPI number was a bit of a surprise to the market but I see little reason to expect The Fed to stop raising rates in March so todayââ,¬â"¢s bounce seems a little overdone. So this coming week we will again be looking for bonds to breakdown below 112 with the first target at 111-08 and then 110-03.

Metals 

Metals managed to stabilize this week. I exited my gold puts for a profit and am still long silver calls. I expect next week to be rather quite in metals. I feel a bit of consolidation coming and that would really be the best thing for metals long term. Look for gold to hold above 550 and silver should stay above 925. If you are not already long I would think about buying close to the above mentioned prices with stops just below recent lows.

Grains 

Grains finally took off and are now poised to see a large spike in volatility. We are long Beans, wheat, and now corn and feel good about all of these. Wheat continues to lead the way but look for corn to have some big moves this coming week. Demand for grains remains strong and weather fears persist. I would not chase this market but I would buy any significant setbacks.

Meats 

Live Cattle showed further weakness as it approached the 8700 level of support not seen since September of ââ,¬â"¢05. We should test that support over the next week and Iââ,¬â"¢ll be on the sidelines til we get there. Lean Hogs made an attempt at a reversal this week but couldnââ,¬â"¢t quite overtake the 6347 necessary to do so. This is a nice setup for a short here with protective stops above 6400.

Softs 

Oj seems to be magnetically attracted to the 130 level. For now I expect further consolidation around this point with a slight bias to an upside breakout. Cocoa continues to bore me and I continue to trade elsewhere. Cocoa really has not moved at all in the last 6 months or more so we should start to see some movement here soon but until then I will stand aside. Coffee failed to hold last weeks support this week but I think that Thursdayââ,¬â"¢s low was a turning point. Look for coffee to resume the uptrend this coming week. Sugar is working its way lower albeit slowly. I expect to see the market fall below 16 cents this coming week. Cotton is trying to rally again but we have significant resistance at the 58-59 level and I am not convinced it will be able to penetrate that resistance level. I will continue to stand aside and wait for a close above 59.25 before getting involved.

Currencies 

EUR/USD
The Euro continued to trend lower most of the week but it looks like Thursdayââ,¬â"¢s low was a turning point. I would like to see a move back above 120 before I get too excited about the long side again, but for now I am long with stops below Thursdayââ,¬â"¢s low.

USD/CHF
So far I am still on the side lines here but I continue to be looking for a short entry point. I do not think we will see a move above 132 near term so I will be getting short next week with stops just above 132.

GBP/USD
Went long late in the week at about 174 with current stops just below 173.50

USD/JPY
The yen seems unsure of itself right now. I have a slight bias to the upside but for now I am buying near 117 and selling near 119 as this has been the range now for all of this month.

AUD/USD
The Ausi seems to have found a bottom and I will be going long here next week with stops below todays low.

USD/CAD
Still long from 115 with stops working at 114.88.

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.