Financials
Stocks: The stock market did in fact get the pause from the Fed that it wanted. It then had the â�,��"suckerâ�,� rally that I mentioned last week, and then of course turned lower. I remain very bearish and expect to see this market continue lower and test the support levels. This coming week we are targeting a move below 1250 on the S&P, and 10,900 on the Dow. I continue to recommend buying at the money puts on more or less any stock index for the near term.

Bonds: After breaking out to the upside last week bonds were unable to follow through this week. As I mentioned last week, I remain a longer term bear of bonds. Not a wild bear mind you but my bias is to the downside. In the near term, since we failed to follow through, I am looking for bonds to fall back into the well established range between 105 and 108. I am recommending people buy the 108 put for September or October. On the short end of the yield curve I am not quite a bearish. The Euro dollar market in particular could continue to trend upward in the near term until we get a clearer sense of the FOMCâ�,��"�s near term bias, which will be data dependent as we know. This means we will likely see an expansion of volatility as every report going forward will push the market around due to all of us trying to guess how the Fed. will interpret said reports.

Energies
What a wild week in the energy pits! First we had the Prudhoe Bay story which many people thought would push us through $80 on crude. Then we had the terrorist arrests in England which also failed to push crude above $80 Let us not forget the situation in Lebanon either. Instead of rallying to and trough $80 we saw a dramatic and counter intuitive sell off based on the idea that demand would slack for air travel based on fear. While this may have a short term affect on travel in the long run it is unlikely to slow demand for travel at all. I am buying this pullback with both hands and continue to target $80 Keep stops below 72.75 if your risk tolerance allows it. I also went long heating oil this week and expect to see both that and unleaded break out of their sideways channels and begin the next leg of this bull market. Natural gas did remain range bound as expected, but we are building a bull flag on the daily chart and I suspect we will see this market get some legs in the ladder half of next week. I am now targeting a test of the recent highs near 850. This bull is just waking from its slumber so be ready for some sleepless nights if you are trading NG.

Metals
Metals pulled back this week and as I mentioned last week we are using this pullback as an opportunity to add to our longs. The recent sell off may scare many away from this market but I would argue that that is exactly the intention. We could easily see these markets drift sideways next week. Near term I see metals trading in a narrow range but ultimately break out to the upside. I continue to target $700 on Gold by the end of the 3rd Quarter. Fridayâ�,��"�s shakeout in Copper makes me even more of a bull this market than ever. The pattern on the daily chart is one that points to a market that could break out and run well above the resistance level at 400. I know many have said that a move above 400 is not possible but I am betting that in the long run 400 will be cheap compared to where we are going!

Grains
Well all I can say about grains this week is last week I was dead wrong. I had thought we had seen the end of the downside slide in grains, but clearly that is not yet the case. I remain long November beans with a protective put and still believe that beans will rally back above 600 before the summer is out. Corn on the other hand could languish here around the 220-225 level in the near term. Solid support for corn lies just below 220 and I do expect that support to hold in at least the near term. Wheat on the other hand could be beginning a real correction that carries it down to about the 340 level in the next few weeks. This market has been quite bullish for some time now and a â�,��"shakeoutâ�,� is more than warranted. Overall I remain long and wrong but since I am long futures and protected via puts I can hold out no matter how low these markets go with no fear of being stopped out or of my loss ever exceeding my predetermined limit.

Softs
OJ continues to struggle with the 175 level and I continue to target 200 before this yearâ�,��"�s hurricane season is over. OJ is a thinly traded market and has a tendency to fall down hard right before a major rally so be warned. I once watched an otherwise good trader loose over $250,000 in one day in OJ due mostly to lack of liquidity. I say this not to scare you away from OJ but rather to impress upon you how important it is to have absolute risk controls in place on every trade, especially in thinly traded markets like OJ. And stops are not absolute as many of you know. I suggest when trading a thin market to use protective options instead of stops. Cocoa rallied and closed above 1555 like I mentioned last week and we there fore went long. Here too we went long futures and protected ourselves with a put rather than a stop. I am looking for cocoa to retrace and test the recent highs near 1750. Coffee rallied to my target at 110, and then stalled again. In the near term we may consolidate the recent rally but a continuation of the uptrend in the longer term seems likely. Sugar continues to sell off as one support level after another fails to stop this slide. I remain on the sidelines for now but I am eyeing 1200 as a buying point if we are able to slide that far. Cotton continues with the two steps forward one step back dance. This market continues to frustrate me as I continue to be long. Fridayâ�,��"�s sell off was due to the surprise numbers in Fridayâ�,��"�s report. This could prove to be a one day break and I continue to favor the long side of this market until we break down below the trend line which we have yet to do.

Meats
In the last couple weeks this complex has really gathered some steam. Lean hogs continued their strong upside move and are approaching resistance from the previous highs up to 73-74. Be sure to protect your profits as this market is quite extended and has yet to see any real correction. Live Cattle has also had quite a nice run, gapping up quite strongly into the weekend. Protect any profits that you have as I expect a pullback to fill the gap before continuing higher. In stark contrast to hogs and cattle, pork bellies sold off quite hard in the past few weeks, and they continue to hit new lows. A correction is likely at some point but trying to catching a falling knife is never a good idea.

Forex Currencies
EUR/USD: This pair seemed to be plagued by indecision for the better part of the week, as it bounced between support @ 1.29 and resistance @ 1.28. However, on Friday we saw a breakdown of support which led to some technical selling. We are reevaluating our long term bullish outlook for this pair, as the fundamentals have yet to solidify themselves on either side. Expect somewhat choppy range bound trade in the near term, for those of you who like to trade the volatility there is some support @ 1.27 with upper level resistance @ 1.28 followed by 1.29. Just be sure to use stops and protect your profits.

USD/CHF: A strong bounce off of support @ 1.22 brought this pair back into the middle of its recent trading range. The recent pullback also violated an uptrend line that had held since early may, often a signal of underlying weakness in the market. I do expect the resistance @ 1.255 to hold strong, and would use any move up to that level as an opportunity to go short with tight stop.

GBP/USD: Considering the events of this week the cable has held up quite well. Essentially, the pair pulled back to previous resistance which should now act as support. Given the momentum seen in the previous rally I do expect this breakout to follow through. However, I would not be surprised to see a bit more consolidation testing the 1.88 support level before the move resumes. If in fact the support does hold, I would go long and place my stop below the low point of the correction.

USD/JPY: As I stated last week I was watching both the long and short sides of this pair for a decisive move. Early in the week a strong move up off of resistance gave us a clear entry on the long side, with stop placement below support @ 114. This trade worked out quite nicely as the stop was never hit and the pair finished the week with strong rally. I recommend using a trailing stop to protect your profits there is overhead resistance @ 116.25 and 117.5.

AUD/USD: The recent consolidation in this pair formed a classic bull flag. On Thursday as the pair moved up through the top of the pattern we initiated a long position and placed our sell stop below the upper limit of the range @ .7645. On Friday we saw a pullback to the breakout point which held, though if the pair breaks down further I would exit quickly to minimize my losses. If the move does follow through I will tighten my stop as it approaches resistance @ .7775.

USD/CAD: This pair could not make up its mind this week and traded within the same range each day. There is clearly a lack of conviction on both sides of the market. The support level @ 1.12 seems to be holding and would be a good place to enter on the long side with no substantial resistance until 1.14. Although I think it would be prudent to wait for a move out of the current range before putting on a new position.

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.