Financials
Stocks: Stocks continue to struggle and as I said last week I continue to be a Bear and expect this market to fall this week after the FOMC announcement no matter what they ultimately decide. Last week I also mentioned selling into any major rallies. I hope some of you have taken that advice as the bounce we saw mid week was a great opportunity for those who had not yet gotten short to do so. I do not expect to see much more upside before the Fed. meeting. The path of least resistance remains down. Rarely do I make long term projections but I am going out on a limb here and predict that the Dow will be below 10,000 by the end of 2006.

Bonds: The 30 year long bond has now fallen back to its support level that lies just above the 105 handle. This should hold a support for the near term, unless the Fed. does something unexpected this week. On a weekly chart you can clearly see the bear flag pattern that we have just made and that should point to a continuation of the overall bear trend longer term, but we could drift for quite a while longer before finally breaking down. I am long at the current level with a stop and reverse orders placed just below 105.

Energies
Crude managed to end the week above $70 and like I said last week I am still targeting a move back above $75 in the near term. We are at trendline resistance and that could cause a short term stall but even that seems unlikely give the current climate surrounding energy. Heating Oil and Unleaded are also nearing trendline resistance but I am expecting an upside breakout across all three of these markets in the near term. Also last week I mentioned the spread between Natural gas and Crude oil is near a level not seen in years and I would advise aggressive spread traders to buy long Natural gas while selling Crude oil as a spread. I also like the long side of Natural gas by itself though I would only attempt to trade that via option spreads as a way to better manage the risks associated with trading Natural gas.

Metals
Metals a whole continue to recover and I expect Gold to claw its way back above $600 this week. Silver too has stabilized and I am looking for a move back above 11.00 by the end of next week. Copper has been the real runaway bull of the bunch but I am not yet convinced this trend will continue. Copper could and probably should consolidate around the 300 â�,�“ 400 level for quite some time which should be great news for range traders. Near term I am a bull but like I said I am not calling for an all out resumption of the trend at all, but rather a choppy market for the rest of the summer.

Grains
Grains continue to get beat up this season but I remain bullish via call spreads. While the rest of the commodities world is taking off the Grain complex as a whole has not participated at all. I continue to expect this to change and remain bullish even though so far it has gotten me no where. But as the season moves along we are likely to see many signs of crop stress that will lead to rallies. I continue to spread calls in the soy complex and corn.

Softs
Oj took off as expected and I think this bull could find its way above 200 before this years hurricane season is over. I hope you bought the 160-180 spread I mentioned last week. If you did not then I suggest you do not chase this market as it is thin and can turn on a dime if it wants to. Wait for a pullback rather than chasing it. Cocoa continues to try and stage a rally. We could see this market pick up the pace this coming week and a rally above 1550 seems very much in the cards. Coffee continues to play dead. Last week I suggested a 100-120 bull call spreads in coffee and this week I continue to recommend that same trade as a great way to position for a long side breakout while keeping overall risks low and defined. Sugar had the beginnings of a rally but we left a gap and it looks like we will run back and â�,��"fillâ�,� the gap before turning back up. Those who missed the break out could work limit orders inside the gap to get long. Overall sugar is a buy from both a trader and investors point of view. Cotton has formed what could be a classic head and shoulders bottom and I just recommended a long cotton trade for our clients. July is being dragged down but I expect December to hold support and stabilize this week.

Meats
Cattle continues to rally while Pigs begin to correct. Overall this market is still in a bullish phase so aggressive traders could look at the pull back in pigs as a buying opportunity. I would not chase cattle higher because we could see a stall in that bull here before too much longer.

Forex Currencies
EUR/USD: This market is at odds with itself over the near term direction. This past weeks late sell off is nothing but shake out ahead of the Fed. and I must again advocate buying long via options to better manage the risk.

USD/CHF: Last week I mentioned that expected the swissy to have broken down back towards 122, that proved to be premature, but I still expect to see this market begin to fall after the Fed meeting this week. I am still targeting 122.

GBP/USD: The cable also broke down so while I was looking for this past week to be quite ahead of the Fed it really turned out to be anything but. Again that is why I prefer to trade option so that when I am wrong it does not kill me.

USD/JPY: This pair is on a wild tear higher and we could make it back above 118 before it is all over but I continue to think the Dollars days of rallying are numbered at best.

AUD/USD: This market also continues to sell off and I continue to expect a bounce. The strength in the Dollar this past week is so unwarranted it is insulting but that is what makes trading such a challenge.

USD/CAD: The Canadian Dollar is trying to break out of its sideways range and while we may see a head fake I believe that is all it will prove to be. So I am selling short above 112 again with a 66 pip stop.

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.