Energies

This week proved once again that there is more to pricing the energy markets than domestic supply/demand and with the low of the week Crude Oil coming in at 5970, the market was able to maintain the technical support it found at 5920 a week earlier. Friday registered a two week high of 6325 and closed at an impressive 6291.

The rally on Friday is attributed in part to the attempted terrorist attack on the Saudi oil center (Abqaiq). While the attack itself was foiled the realization is that even the Saudiâ�,��"�s arenâ�,��"�t immune to these types of disruptions. If an attack of this type were successful the effect on supply would be devastating and it wouldnâ�,��"�t take long before the SPR (Strategic Petroleum Reserve) would have to be opened up for business. Obviously we are talking about an event that hasnâ�,��"�t taken place but it becomes more plausible with every passing attempt.

Traders are also eyeing the latest news out of the Niger Delta conflict where rebels have taken hostages and are now making threats of further attacks in the region. The Niger Delta produces some of the best grade Crude Oil on the market and because of that it really canâ�,��"�t be replaced with excess from other producers. The Nigerian government is attempting to handle this one on their own at the moment but that will change shortly if there are no improvements over the next couple of weeks.

While I expected Crude Oil to hold support and rise this week, I surely didnâ�,��"�t expect to see this much volatility. My assumption that the world is not stable enough for this market to fall much further remains in tact and we will hold our Bullish position for the week in Crude and Natural Gas.

Financials

Stocks
I continue to be unimpressed by what I see in the stock indexes. The S&P continues to struggle with the 1300 handle. While the Dow did manage to move above 11,000, since then it has stalled. One could point to the daily chart of the Dow and see a bull flag but I would be cautious if I were going long based on that pattern. With neither the Russell 2000 nor the S&P 500 able to make new highs I view this as a sign that stocks are not nearly as strong as CNBC might have you believing. I am looking at spreading long S&Pâ�,��"�s and or Russell 2000â�,��"�s against short Dow contracts this week, but overall I favor the short side of all the stock indices this week.

Bonds
Bonds seem to be in love with the 113 handle. We have been hovering near this level for over a month now. It is unlikely we will spend too much more time here. I have been calling for and trying to wait patiently for the next move in bonds which I continue to believe will be to the downside. After todayâ�,��"�s option expiration, I expect bonds to trade a bit more freely. Look for some momentum to the downside to begin as more and more reports point to a Fed that is unable to stop raising rates near term due to continued signs of inflation. Next target is a move to 111-08.

Metals

Metals got a late week boost due to violence in the Middle East. Reports out of the region continue to show escalating violence and unrest. These factors could be combining to form a â�,��"perfect desert stormâ�,� but I am not a doomsday believer. I do still expect metals to continue to consolidate. We may see significant moves in metals in both directions but overall I expect to find gold back near 550 inside of the next 3-5 weeks.

Grains

Grains were mixed this week. The soy complex has struggled while wheat and corn continue to be strong. I still favor long wheat over other grains but corn is a very close second favorite. We exited both our long March corn and wheat calls this week with some nice profits that more than made up for the loss we took in beans. Traders who are not already involved in grains are encouraged to take a fresh look at them, in particular look at May or July corn. The energy complex has been able to maintain high prices and this is fueling more and more need for alternatives like ethanol. More and more corn is being used to produce ethanol and this trend seems to be just beginning.

Meats

Live Cattle began to retest support this week as it crept to a low of 8695 on Friday. Iâ�,��"�m ready to call a bottom here and will be constructing a 40 day April option spread to capitalize on the bounce.

While Lean Hogs pushed through resistance on the open Monday, the really was short lived. By the end of the week the market found support back at 6100 but I donâ�,��"�t expect it to hold through next Monday.

Softs

OJ is trying to resume the rally. A close above 135 would confirm the breakout. Cocoa keeps boring me but aggressive traders could consider going long around 1450 with a tight stop just below 1425. Last Thursdayâ�,��"�s low did turn out to be a turning point like I mentioned here last week. Look for coffee to continue the uptrend and gain some needed momentum this coming week. Sugar to breakdown this week but continues to struggle with 18. I remain bearish and am still holding May 1650 puts. Cotton is still trying to rally but we still have significant resistance at the 58-59 level and I am not yet 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
Moved my stops up to break even early in the week and then got stopped out there. So no harm no foul but I am a bit surprised by the resilience of the Dollar. With more and more traders beginning to expect the Fed to continue raising rates for the foreseeable future a strong Dollar could continue longer than we originally expected. I did however go long late today and will hold long over the weekend.

USD/CHF
Finally went short late today and will keep them over the weekend as well, stops working at 132.12

GBP/USD
Still long from late last week at 174 with current stops just below 173.50.

USD/JPY
What a week for the Yen! We went short at 119 and covered below 117 two days later! I now have a small short position on from 116.92 with a stop at 117.20. The range I mentioned last week was broken out of on the downside but so far has not really followed through. Look for momentum to pick up and I would not be surprised to see 116 hit early this coming week.

AUD/USD
Got stopped out at a small loss and am now standing aside. I have a slight bias to the bull side but will wait for a move back above 74.50 to confirm.

USD/CAD
Moved my stops up to my entry and got stopped out at breakeven. I did however go long at 114.93 over the weekend.

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