Energies
A strong technical top was put in place this week and the market has established yet another technical reversal.  This bear hates to say it, but if this is the plunge we have all been waiting for then I am about to miss it because this looks like a technical buy to me.  Critical Fib supports, trend line support and the idea that this is just about the first percentage area that the market could have topped, all make me think this dip will be bought up and a fresh high will be set.  Also, Memorial Day weekend marks a seasonal rally point for the energy markets, so from a timing perspective this market should see a psychological and seasonal buying boost over the next two weeks.  I continue to be a buyer of the unleaded/heat spread.

Financials
Stocks utterly collapsed this week, focused mainly on an inflation scare of a CPI report and general momentum weakness across the stock spectrum.  The low set Friday is a critical one, just a couple points below the year’s low on the S&P and it is quite possible that the market may re-develop a trading range with 1258 as a bottom support.  I recommend short strangles and being a futures buyer at 1264 (double stop reversal at 1257.50) to play the near term support to hold.  Long term the market is either going to continue to consolidate or fail miserably below 1258.  Bonds gave us a dead cat bounce this week, and has some room to run if it wants to, but the market is too confused to follow through on a real rally.  I was never convinced the Fed would stop the hikes anytime soon, but I believe the economic outlook forces Bernanke to either ‘1 and done’ the whole thing with a 50 point hike next meeting or two more quarters and call it quits.  Even it I call it right, it is impossible to know if the lows will be broken or if the market’s perception will support prices.  The best play is to buy puts on a move to 109 on the 30yr. (if it gets there).  The dollar showed support as expected and the technical setup on the euro, yen and Canadian are all very bearish.  The chart patterns all require large intraday moves over the next several days to give the technical momentum needed to avoid premature support.  I see the Canadian running to .8750 and the euro seeing 1.25 if not lower.  The dollar should go test 85.71 shortly.  If the market dwindles around their current price levels for too long this may just be a fake out – but I doubt it.

Grains
Wheat ran up this week as crop fears send this market into near hysteria buying – many would attribute it to fund buying, but it is just a solid technical breakout.  The grain situation bothers me because I see a solid summer run, but the market needed a technical retracement to clear out the specs before making the move.  I will wait it out and look for a selloff these next two weeks before getting long for the summer.  A good technical confirm of a bear retracement on wheat would be a July close below 4.01. Beans are diverging from the pack and look ugly.

Meats
Cattle continues to rally, but a possible top below the Fib 38.2 line and the catalyst of a cattle on feed report may just shake this rally.  I recommend long strangles going into Monday and I am out of my longs until June breaks above 79.40.  Hogs remain bullish and I will stay long with a wide trailing stop.

Metals
Gold took the plunge this week and brought the metals complex with it.  Major price action saw massive plunges in platinum (all time high on Sunday’s night session only to sell off nearly $5,000 a contract in the first 10 minutes on Monday!), copper, silver, gold, etc.  With a continued dollar run this should be a major top. 

Softs 
OJ saw significant selling and should be on the road to a nice pre-hurricane season retracement.  A move to 120 is not out of the question.  Coffee is failing miserably, but $1 support is quite possible – this week will let everyone know whether this is a shakeout or a washout.  Cocoa’s retracement is a great buying opportunity.  Cotton prices tumbled as expected and should continue to fail.  Sugar saw some wild selling this week, but technically held bottom support above 1585.  The market broke south on the near term pennant, but the long term pennant is holding up.  I am a buyer with stops at 1580 and then reverse and go short because if they close below 1585 the floor will fall out of the market.  Lumber is ugly and could get even more selling pressure.

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.