Financials
Stocks: Stocks tried to stage a rally this week but died out just short of the upper Bollinger band on the daily charts. This is no major surprise and we continue to be bearish. This market remains largely range bound and since we are at the upper end of the range we continue to go short with stops above Fridayââ,¬â"¢s highs. We may see a brief pop in stocks next week if the Fed. does in fact pause(which I doubt). Anything but a pause should push the market lower and even if we get a pause we should also go lower but only after we stage a final sucker rally. Overall I must continue to advocate buying puts anytime we near the upper end of the range.

Bonds: Bonds broke out above the 108 handle it had been fighting with for the past week. This break out is based on the idea that the Fed is about to pause on Tuesday. If they signal anything but a pause we should see bonds fall. If they do in fact pause or signal one in the near future then I expect it would be off to the races for bonds. We could see a manic rally that runs straight to 111. Longer term I am bearish bonds and will be looking for this rally to stall and use that as a point to go short. The main reason for my bearish stance is simply that inflation is here and the Fed will have little choice but to try and keep inflation in check as we move forward.

Energies
The long side of energy proved to be the right place to be this past week. We are having trouble following through but I expect that this coming week the path of least resistance will continue to be to the upside. I continue to see $80 being achieved in the near term. Heating oil should see 220 this week and Unleaded should test 235. Natural gas on the other hand is likely to drift sideways between 7.50 and 7.00 in the near term. Overall energy remains very much in bull mode but resistance at or near 80 on crude could act like a wall if approached so keep stops tight.

Metals
Gold managed to hold the line at 650 this past week. Continued geopolitical tensions should keep the bid in this market. We may see a brief pullback this week and if we do it is nothing short of a buying opportunity. Silver and copper are leading the complex higher and this has been a sign in the past that the bull is just getting started again. I continue to target a move back towards 700 sometime in the 3rd quarter. If you look at ratio charts of gold vs. almost any major currency you can see that gold is still gaining ground on them. This is a clear sign that Gold is still very much in a bull market and that is one of the main technical features that is keeping the bid in this market.

Grains
Grains staged a dead cat bounce this past week. The downside in these markets seems to have been exhausted and we are likely to begin to see the pre harvest rallies begin any day now. Any further heat/weather stress could really get this market moving to the bull side. Near term look for wheat to be above 400, corn to stabilize above 250 and beans to stay above 600. After a brief consolidation at these levels we should begin to see the markets rally.

Softs
So far OJ has not been able break out above 175. This market may drift in the near term but the trend remains up and it seems more of a question of when not if this market will move up. I continue to target 200 before this yearââ,¬â"¢s hurricane season is over. Cocoa tried to fill the gap I mentioned last week, and then failed to follow through as expected. This market is likely to remain range bound for some time. For now I would avoid this market unless we see a close below 1475 or above 1555. Coffee rallied to my target at 107.50, and then stalled. This is what we expected, in the near term we may consolidate the recent rally but a move above 110 seems more than likely. We have congestion between 110 ââ,¬â€œ 115 so do not be surprised to find this market stalling at those levels as well. Overall this bull is very much alive and well and quite frankly this could be just the beginning of a much larger move. Sugar continues to struggle and I remain a cautious bull. The bear side of this market seems very limited and therefore I am really just watching this market for a sign of a turn which we have yet to see. Cotton has thus far maintained the upward trend. I continue to target 58 in the near term on the Dec. contract. Overall I feel this market is still a sleeping bull that once woken will run much higher but for now it looks as if the bull continues to hit the snooze button.

Meats
As we said last week, Lean Hogs showed some promise as they maintained the bullish gap up from last week. At this point it may be a bit late to put on a straight long position, but entering the market with a calendar spread or a protective put might add to your chances of success. Live cattle also showed some strength on Friday, breaking out of a downtrend with a nice gap. We will be watching for cattle to fill the gap to validate the move.

Forex Currencies
EUR/USD: Last week we mentioned the underlying strength the Euro had against the dollar. The momentum and intraday action allowed the Euro to maintain itââ,¬â"¢s upwards movement, breaking out through resistance below 1.28, surging all the way to 1.29 when Fridayââ,¬â"¢s payroll report came out. From here we expect the resistance @ 1.295-1.30 to be significant in the near term, while using the 1.28 level as for support.

USD/CHF: This pair has continued its weakness, and is currently sitting in on the support between 1.225-1.23. A breakdown through that support level would be a good place to short, though the market could bounce around above the support before ultimately resuming its downtrend targeting the lows around 1.20.

GBP/USD: What a week for this pair. Strong upside momentum helped the cable b/o through its resistance @ 1.88- 1.89. The consolidation we were expecting never materialized; in fact the underlying strength of the market became apparent when the pound surged up early in the week. A classic example of powerfully market can react when b/o through heavy resistance areas. We believe this pair will now lead the others and next week we will be watching to see if the rally can hold support and follow through.

USD/JPY: On a daily chart the pair this pair is currently consolidating just below some substantial resistance from the upper end of a down trending channel. A breakdown through the 114 level could see quite a rapid decline down to the support @ 112, followed by 110. We still favor the short side of this pair, though an aggressive trader could take a countertrend long position here as the 114 support level does allow for quite a tight sell stop, attempting to capture a b/o from the current level.

AUD/USD: As I said last week, this pair was becoming overextended, and this weekââ,¬â"¢s consolidation simply allowed the market to digest its recent gains. As with the other pairs, the aussie responded quite strongly to Fridays job report, and I am watching for a breakout through .7680 to signal the beginning of a follow through. Beyond that the next level of resistance is .7775, and considering what the GBP/USD pair did this week, a move above that level would be quite bullish.

USD/CAD: The divergence of this pair from other USD pairs reversed itself this week as we saw quite a pullback. This weekââ,¬â"¢s move retraced the entire previous rally in half the time. The upward drift I mentioned last week is often a setup that precedes a sharp sell off as it portrays a lack of conviction from buyers. I would expect a brief test of the current support level 1.1225-1.1250, though if we see a break below that the next support level is all the way down at 1.110.

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.