Energies
It is sad to say but the real fireworks came long after July 4th as escalating war between Israel and Lebanon is further fueled by a verbal war being shown across every TV news station in the world.  If Iran gets involved then WWIII might not be far away.  The market hysteria here was offset a bit by an end of day profit taking selloff across the energy spectrum.  As I have been saying for weeks, with the crude target of $78 hit, that the right play is to walk away early on the longs and sell some $90 calls for September ââ,¬â€œ they were paying you over $500 today to take that bet and I say stand in the face of the geopolitical issues and collect that premium!  Bear put spreads were dirt cheap as well and begging for a contrarian play at this point.  This short term bull just turned into a bear.

Financials
The stock market plunged as geopolitical issues far outweighed any earnings news.  The market even shrugged off the Merck court victory.  I have been suggesting this market is stuck in a sideways price action, but if we break and close below 1229 on the S&P then the market is officially bearish.  Otherwise I have to be a buyer down here.  Bonds surged on a flight to quality and are a great short just below 108-16.  The dollar confirmed bullish momentum today and is still a strong buy with bear signals on the Canadian, euro and yen (despite Japanââ,¬â"¢s rate hike). 

Grains
Grains were all over the map with a mildly bullish crop report and then a shift in weather with some much needed rain across some of the corn belt and wheat regions.  The next two weeks is critical in the corn fields, because if we get a hot and dry patch then the yields will be well under estimates.  Bottom line is if we go until the end of the month with acceptable weather then the summer bull run is likely dead, but if we catch some weather (even just for 10 days or so) then $3 corn is within the realm of possibility ââ,¬â€œ it is just that up in the air.  September 2.60 vs. 2.80 bull call spreads are a good play.  The Australia wheat crop is hurting on a hot and dry June, but the near term weather in the states means a heck of lot more as we witnessed on Thursdayââ,¬â"¢s weather selloff.  Rough rice is looking awfully bullish and OTM calls for September are still highly recommended.

Meats
The cattle and hog plunge has begun, so hold those puts and hang on for a meltdown.  The market might tighten up a bit ahead of next Fridayââ,¬â"¢s cattle on feed and slaughter numbers, but overall the technical setup is too bearish to ignore.

Metals
Gold and silver surged on a flight to quality, making my bearish outlook look quite ridiculous.  Bottom line is the dollar is strong and it just doesnââ,¬â"¢t matter one damn bit with Israel and Lebanon going at it.  The metals are rallying on a global level and heightened geopolitical issues just add fuel to the fire.  I canââ,¬â"¢t help but remain a contrarian with the expectation of an eventual realignment with US dollar pricing, as foolish as that may seem.

Softs
OJ self-destructed as rollover from July into Sept. caused a wave of selling, putting this market into a technical quandary.  OJ could sure use a hurricane to get the bull running again.  Look at some Nov. 200 calls for about $225 as a great volatility play.  Coffee choppiness is on the brink of a major technical breakout ââ,¬â€œ buy bull call spreads and throw in a few dirt cheap put plays just in case the volatility goes the wrong way.  Cocoa prices remain strong as issues with the Ivory Coast disarmament efforts create solid price support and continuing upside momentum.  Cotton is still a sell.  Sugarââ,¬â"¢s fallout off an island key reversal top is worth a bull double take.  Puts are still dirt cheap here and even a bull canââ,¬â"¢t help but want some protection on days like today.

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.