Energies
Energies reversed a very bearish daily chart and setup another breakout to the upside.  I must admit that on a technical level I was surprised the market resisted out where it did and it is not surprising at all that the market appears primed to set fresh highs and run.  The market could see another 5% or more before topping.  Despite my long term fundamental view that the energy markets are not permanently headed higher (in a few years we will be talking about whether oil prices will see $20 a barrel), the market is not indicating a breakdown any time soon.  Natural gas is a good bull play and I like a long unleaded versus short heating oil spread right now.

Financials
Stocks plummeted as the Bernanke era of misunderstood speeches begins.  This is no small failure but the market never seems to follow through on any major technical break.  Additionally there is critical support in several places holding the S&P up (1286, 1280, 1267, etc.).  It is notable that the Dow failed to break the all time highs and that overall this momentum shift has momentum of its own.  Bonds acted predictably to the Feds ambiguous statements and looks to have significant downside potential (especially if we close below the lows on Monday).  If I have Bernanke pegged then June 28th will mark the last rate hike, but it could be 50 basis points that ultimately makes it a legitimate ââ,¬Ëœone and doneââ,¬â"¢.  The euro is just running away with it as the dollar pounds through prior support on its way to .8050.  The gut is screaming a premature buy on the dollar, but there is no denying that it is melting away.  Am I the only one who thought the trade deficit numbers should have done more to support the dollar (it lasted about 10 minutes)?  I suspect a delayed reaction to a shocker of a number is not too far away.  The euro could be back at 125 in a week and I say June puts are too cheap to pass up the possibility of a much needed retracement and a proper filling of the US dollar chart to the upside.  The Canadian dollar setup a nice chart pattern to offer a fairly significant retracement this week.  If we crack .8980 I would get aggressively short looking for a move to at least .8750 if not a whole lot more.

Grains
A major grain rally came on the heels of significantly bullish reports in corn and wheat.  The main thrust of the rally is confirming whispers of the failed wheat crop and the much higher than anticipated use of corn for ethanol production.  The forecast for 2007 ethanol production is about as blatant of a PR job as I have seen.  When the energy market tops in a couple of weeks corn will sail south.  I may have jumped the gun looking for a value play on a grain dip ahead of the summer, but the gut says this isnââ,¬â"¢t the rally you have all been waiting for.  Take your profit and look for a better entry.  If beans get above $6.50 then Iââ,¬â"¢ll take another look.  Also, buy 2 corn to 1 short wheat for a nice spread play.

Meats
A nice bull move broke through some resistance in cattle and hogs and made this dead cat bounce have another life or two.  The room for a real retracement is there, so I remain long all the meats with a trailing stop. 

Metals
The metals markets are simply in full hysteria mode.  Did any one catch the all-time high set in the overnight in Platinum ââ,¬â€œ only to plummet nearly $5,000 a contract on the open?  Copper limit moves are becoming an everyday occurrence and the market is about 6 times the price of just 3 years ago ââ,¬â€œ putting crudeââ,¬â"¢s move to shame (and the gold move to shame too!).  Buy Dec. 250 puts.  The trade deficit numbers that were widely ignored this week will prove to have a longer term impact in these markets as it may signal a topping point for these out of control metals.  Throw in a 300 - 400 point bounce in the dollar and watch it all collapse!

Softs
OJ may have seen the end to its run this week as the market is fundamentally and technically setting up to fail ahead of the hurricane season rally.  I like puts now and a reverse and go long play if we see 115-120 type prices.  Coffee broke miserably through key support and could give specs a major flush out before legit buy and hold players come in.  Cocoa is through 1550 and should make a run -- I see any short term pullback as an excuse to buy on dips.  Cotton prices got a boost from a solid crop report, but this market is destined to see lower prices.  Sugar is setting up a breakout big-time, and the gut says it is to the upside despite a lack of fundamental rationale supporting it.  Lumber is still a sell.

James Mound is the head analyst for www.MoundReport.com, and author of the commodity book 7 Secrets. For a free email subscription to James Mound's Weekend Commodities Review and Trade of the Month, click here.