Financials
Stocks: Stocks managed to hold them selves up better than we expected this week. Now that we have gotten through July option expiration I would not be surprised to see this market continue lower this coming week. I continue to target 10500 on the Dow in the near term. I continue to monitor the ever growing small spec long position on the Commitment of traders reports as a clear sign of distribution. If you have still not protected your downside risk in stocks please contact us as this protection is quite easy to put on and can really save a portfolio from ruin during these tumultuous times.

Bonds: Bernanke gave the market a clear signal that a pause is near? That is the word on the street but I remain unconvinced. All signs point to higher than expected inflation. How can we be expecting the Fed. to pause when at the same time the data continues to show more and more real inflation? Once again I think the bond market has gotten ahead of itself and we are setting up for a big move as we get close to the August 8th FOMC meeting. Near term the path of least resistance remains up but I would be looking to buy some puts on any big day up in bonds as a great trade ahead of the next meeting. Solid resistance lies just above the 108 handle so look for that to act like a wall this coming week.

Energies
Crude sold off a bit but remains near all time highs. We see little if anything out there that would cause a dramatic pullback in energy and therefore we remain bullish in the near term. I would not be surprised to see Oil making new highs before the end of this month. With a number of refineries shut down here in the US we are very likely going to see a spike in Unleaded as demand at this time of year remains high regardless of price. Natural gas had the typical two steps forward and one step back action this week but overall I remain a bull and continue to target a move back towards 7.00.

Metals
Metals had the shake out that I was mentioning last week sooner than I expected but now that it is here we are happy to be buying at the current levels in almost all the metals. Gold should hold support above 600 and we should see the bid come back into metals next week as the situation in Israel continues to deteriorate. Silver too should find its way back above 11.50 by weeks end and then a move above 12.00 wonââ,¬â"¢t be far off. Copper is very volatile and is trading within the 300 - 400 range I mentioned a few months ago. This range is huge and now that we are near the bottom of it aggressive trader could get long with stops below critical support levels. Volatility within this copper is very high and volume is very thin so this market should only be traded by those with deep pockets and a strong heart!

Grains
Grains had a rough week and failed to get the rally started. While wheat is the run away bull the rest of the complex struggles. Corn and the soybean complex will begin to rally soon; it is a matter of when more than if. We feel the best way to position for the when is by spreading options. Wheat should rally above 420 this coming week and Corn should hold support above 235. Beans should hold above 575. I am very bullish these markets and am using these pullbacks to reposition myself long going into late summer and harvest which is typically the time of year that sees the most volatility in grains.

Softs
Oj did stop me out this week but I remain bullish in the near term. The 165-185 call spread for November is a great trade if you get it filled for 5.00 or less. Cocoa really broke down this week as I feared. I see this market drifting sideways in the near term and for now will stand aside until we see signs of a new directional move. Coffee continues to drift lower but we had a key reversal in this market today and I think we will see this market begin to rally this coming week. My first target is a move back above 102.50 on the Dec. contract. Sugar too continues to sell off but as I mentioned last week this market remains a strong buy for the longer term. I continue to be long via calls and I do expect support at 15 on the October contract to hold if we do go lower. Cotton finally started moving up this week. I expect this market to accelerate to the upside this week and my first target is a move back above 56 on the Dec. contract. If we can get through 56 then we have a real shot at seeing 58 hit before the end of the week.

Meats
Meats spent the week drifting as we expected and I continue to be unimpressed by these markets in the near term. If you forced me to take a position in these markets I would favor the short side of the market in the near term. But as I mentioned last week I personally donââ,¬â"¢t see enough opportunity in these markets to warrant trading them at this time.

Forex Currencies
EUR/USD: The Euro did finally reversed and began to rally this past week. I expect last weekââ,¬â"¢s lows to hold for some time and we should now be at the beginning of the next bull run in the Euro. My first target this week is a test of resistance at the 1.28 level. We will likely find ourselves blasting through that level this way to 1.30 by the beginning of August.

USD/CHF: The swissy stopped me out this past week and I failed to get back in. I continue to favor the short side though this market has been particularly hard to trade these last few weeks. Near term I am targeting a move back to 1.22.

GBP/USD: The cable started the week out with a big downside blow off only to reverse and end up above my target of 1.85. This market is leading the rest of the pairs against the dollar higher and I expect that trend to continue in the near term. Next target is a move to 1.88.

USD/JPY: This market also had a blow off counter move earlier in the week, only to reverse and fall quite hard by the end of the week. Here too I favor the short side and I am expecting a move back to 114 this coming week.

AUD/USD: This market is moving in the right direction but the pace is slower than I expected. I continue to target 76.50 in the near term.

USD/CAD: This market seems to be the one that does not want to play along with the rest of us. This market remains strong even in the face of a falling Dollar every else in the world. I continue to see the bull flag pattern that I mentioned last week but I still favor the short side none the less due to fundamentals.

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.