Energies

It seemed as though the bears were licking their chops at the beginning of the week as news continued to point to robust supplies on hand and no serious threat for disruptions in the immediate picture. However, as the energy complex continued to show strength, most had to concede that the market will continue to shrug off bearish supply news just as long as these $60+ Crude Oil prices canâ�,��"�t be tied to dragging down the world economy.

Sure there are plenty of geopolitical issues one could point to that would bolster the argument for the bulls. For example the Niger Delta conflict has knocked about 455,000 b/d of high grade, light sweet Crude Oil production offline and aside from a allowing some low collateral hostages free, the stand-off with the MEND rebels doesnâ�,��"�t seem to be getting any closer to resolved. It will be interesting to see if they follow through on threats of more disruptions over the weekend. The other obvious issue from abroad comes from Tehranâ�,��"�s insistence upon moving forward with its own uranium enrichment despite the objections from the U.S. and Europe. The obvious concern here is that the U.N. could impose an embargo or Iran itself could stop the flow of oil in protest to a referral to the Security Counsel. While both of these scenarios are unlikely due to the extreme affect such a move by either side would have on the world economy, they nevertheless are reminders that the entire crude oil market is dictated by a few key players and could be turned on its head by any one of them.

The Distillates reported a slight draw this week and while refineries are making the switch between seasons we are getting some forecasts for cooler temps over the weekend. This obviously helped carry the Heating Oil markets back above their 4 week highs around 180 and will be supportive in the coming weeks if temps remain cool. I think we are making a convincing run to the upside across the board and we will continue to hold our Call Option Spreads on Crude and Natural Gas into next week.

Financials 

Stocks
Stocks struggled this week and today were quite a wild ride. In candlestick charting today could be called a â�,��"long legged dojiâ�,� Which is traditionally a sign of indecision. Overall I expect weakness next week with the Dow falling well below 10,900.

Bonds
Itâ�,��"�s a miracle! After spending over a month trading back and forth around the 113 handle bonds finally broke below 112. We closed near support which lies at 111-08. We have little if any support below that point except at 110-03 which was also the lowest low we have had since April of 2005. Look for Bonds to continue to trend to the downside this week and if support does not hold; look out below.

Metals 

Metals did trend higher this week due in part to a weakening Dollar. Silver broke out above $10.00 for the first time since 1984. Gold is still lagging silver which is really not news but it could be a sign that silver has gotten a bit ahead of itself. I expect more volatility in metals this coming week, and while I remain a long term bull I am not yet convinced that we are about to resume the uptrend. I continue to see signs of further consolidation in the near term.

Grains 

Grains, while ending the week rather strong, overall spent the week consolidating. Corn managed to edge slightly higher and Bean Oil really took off, which could be an early sign of some more upside to come in the grains in the near term. I continue to be long Corn via options. Derek Frey 3/3/2006

Meats 

Support did not hold for the Live Cattle market this week and my friends who bet against my short term bounce forecast were right on this one. This market is set to drop further over the next few months but the near term should see at least a 2.00 bounce before the month is up before heading much lower.

Lean Hogs found support and consolidated a little her but I figure this is just a stall before moving lower.

Softs 

Oj failed to follow through with a move above 135 and is now consolidating. I would look to buy on a close above 135 or sell a close below 130, other wise stand aside. Cocoa failed to hold support at 1450, and is maintaining the trend lower. Next downside target is a move back towards 1350. Coffee did manage to maintain the uptrend but has yet to accelerate. I am looking for a move back above 115 this coming week. Sugar did break down further and then staged a solid dead cat bounce. I expect more weakness here near term and still think a move below 16 is coming. Cotton did resist out as I mentioned last week and has now broken the daily uptrend. We could easily see a move back to support which lies at 52.

Currencies 

EUR/USD
What a move this week! After starting the week at a new low we managed to rally over 200 pips. Early next week I expect to see some consolidation of this past weeks rally but by late next week we could see a move towards 121.50.

USD/CHF
Got stopped out early and then sold short again on the move back below 132, trailing stop by 50 pips as of today.

GBP/USD
I am still long from late last week at 174 with current stops just below 175.00.

USD/JPY
I covered at 116 and am still flat since then. I am working a buy stop at 117.20.

AUD/USD
Got the bull confirm I was waiting for and am now long from 7450 with stops just below 7400.

USD/CAD
Got stopped out of my long here and have not touched this market since. But near term I continue to favor the bull side.

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