Financials 

Stocks: Stocks continue to feel pressure from all sides. I do not expect 1300 on the S&P to hold. Look for a real slide in the indexes to begin this week. I know I have been saying this for weeks and sooner or later I will be right. That was not my plan though. We have been seeing bad signs for stocks for many weeks now and the market has been slow to react. Buy April S&P 1300 puts and hold.

Bonds: Bonds spent the week rallying mostly due to speculation that the Fed is nearing the end of itâ�,��"�s rate hiking cycle. Short term I see this recent rally as a selling opportunity for shorts. Any short trades put on near 112 should be fine with stops just above 113. Longer term however I expect mostly sideways range bound trading for much of this year unless Mr. Bernanke does something unexpected.

Energies 

We finally began to see the effect of increasing demand and a couple of hiccups in the production of Crude by our friends in the Niger Delta and others abroad. As this past Wednesdayâ�,��"�s DOE report was released, many of the Bulls could be heard in the background (and even a few on T.V.) with an â�,�I told you soâ�,�. No big surprise for many that the recent focus on seven year highs in inventory levels isnâ�,��"�t going to be enough to squash a rally on near record demand levels, terrorism, Iran, Nigeria, Iraq ad infinitum. The world is a different place today and as demand and geo-political concerns have blossomed over the past five years the balancing act between supply and demand has become more akin to the blind folded tight rope variety.

Fundamentally there are several other more quantifiable things taking place that should contribute to the recent rally. First I would point to the recent cold front moving through the Northeast just as refineries are in the middle of their seasonal change over and beginning to focus their efforts on Unleaded production ahead of the driving season instead of Heating Oil. Secondly I canâ�,��"�t discount the fact that Spring Break is upon us and demand for Unleaded seems to be very healthy, very early as refineries are struggling to keep pace during this transition period.

Now that we have some inventory concerns being raised by the DOE reports, Iâ�,��"�m looking for a long awaited push through the top ($64.00) of Crude Oils recent range. Donâ�,��"�t be surprised to see a significant shake out to the downside just prior to this happening especially with the Bulls on the small spec side feeling quite bolstered by these recent turns of events. I am still holding our bullish call spread and Nat Gas spreads. Be on the lookout for an Unleaded trade in the middle of the week.

Metals 

Metals spent the week climbing higher with silver leading the way. I have always paid close attention to the Gold Silver spread, and that spread is now wider than it has been in years. This spread is very closely watched by metals traders the world over and is not expected to remain as wide as it currently is for much longer. We already started to see this spread begin to come in late this week. The recent chatter about the new silver ETF has largely been the driver of this widening rather than some shift in fundamentals. With that said we feel that this spread could be one of the best spread trades in all of 2006. Copper continues to rally to new highs partly due to a landslide earlier in the week that affected some copper mines in Indonesia. Look for continued strength in copper as buying copper is not a want but a need for all developing nations.

Grains 

Spent most of the week trending lower. I expect these markets to find support and stabilize themselves this coming week. Longer term I believe this should be a great week to buy long for the summer. Wheat should hold above 340, corn should hold 215 and soybeans should hold above 560.

Softs 

For OJ all I can say is here we come 150. We should hit some resistance at 150 and consolidate the recent rally for a bit after that. My stop has been moved up from 135.25 to 139.75. Cocoa I am still short from 1501 with a stop still working at 1535, I plan to move my stop to my entry point on a close below 1475. Coffee is still not making any real attempts at turning around and I remain on the sidelines. Near term I continue to look for a bounce. Sugar looks like it has completed its slide and I am now recommending a bull call spread in sugar that is buying the July 1700 call while selling the 1900 call. Take a look at a weekly chart on sugar if you would like to see a text book example of a bull flag. Cotton continues to slide and near term support has not held. I do expect a sharp turn around soon but â�,��"the waiting is the hardest partâ�,� as Tom Petty put it.

Meats

We never made the bounce to 8400 last week for April Live Cattle so there was no entry point for us but nonetheless the market closed below support on Friday at 8247. Iâ�,��"�m still calling for a significant bounce before the market continues any lower so weâ�,��"�ll keep our target entry for a short position at 8400 for this week. The Hogs broke down early in the week but managed to stage an impressive rally for Fridays close. 5500 is the support level the market needs to break through to continue to run to the downside. I think we may be a week or two away from breaking down all the buyers out there. Selling OTM April Calls (24 days to expiration) on rallies here is a good play for those in a position to do so.

Forex Currencies

EUR/USD: The Euro sold off as I expected this week though it did go further down and stayed there longer than I had expected. Look for a bounce this week with follow through into next week.

USD/CHF: Got stopped out of my short at 129.60 for roughly a 140 pip profit. I then went short late in the week as we spiked near 132. I am short from 131.83 now with a stop at 132.47. Target is the last weeks low or any move back to 129.

GBP/USD: After spending much of the week grinding lower the cable reversed and began to bounce. Look for this trend to continue this week. I expect a move back towards 176 near term and we may even break out above that this time.

USD/JPY: After a brief bounce early this week we could see this pair continue to trend lower. Support at 117 should be the next point of consolidation.

AUD/USD: Solid support lies just below 70 so look for that to hold at least in the near term. The recent breakdown could be the beginning of a real trend so keep alert. Any move below 6781 would signal a downside breakout.

USD/CAD: The Canadian has been on quite a run and is quickly edging up against resistance which lies at 1.1750. Any move above that would signal a breakout so here too stay alert.

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

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.