Financials 
Stocks: Stocks continue to struggle with resistance this past week. At the same time they did not stage any real bearish move either. Not a big surprise considering where we are in the calendar. The last two weeks in August are traditionally one of the lowest volume periods for any year. We should see more of the same this coming week. I remained biased to the bear side and continue to accumulate puts on any strength that we see.

Bonds: Bonds rallied to resistance just above 110 as we mentioned it would last week. Bonds have now rallied 5 full basis points from the June lows and we are very near an overbought stage in this market. I am now aggressively accumulating puts in this market and am expecting a move back below 109 in the near term.

Energies 
Crude Oil did manage to hold the critical $70 level that I mentioned last week. Geopolitical and weather factors continue to dominate the trade in energies and we are likely to see the bid in them remain. In the week ahead we are targeting a run towards $75 on the October contract. Heating Oil and Unleaded also managed to end the week closer to the mid points of the current ranges than we started the week. I continue to be bullish energy especially with the threat of a Hurricane entering the Gulf of Mexico early next week. Heating oil and Natural gas stand to benefit the most if we do have any real hurricane activity next week so get ready for a wild ride. If the hurricane dies out or changes course do not look for the energy markets to fall apart as there are so many other factors keeping these markets up I could not list them all here even if I wanted to.

Metals
Metals managed to hold themselves up this past week but just barely. Gold is suffering from the perception that there is a short term fall off in demand. I remain bullish and continue to expect a move back towards 650 near term. Longer term we will be recommending a 650-700-750 Butterfly spread on the December Gold contract if you can get it filled for around $750 Contact us if you are interested in learning more about this trade.

Silver has been leading gold for months now and is one of the reasons I remain as bullish as I am. I continue to target 13.00 in the near term. This market is likely to see volatility increase over the coming weeks so here more than ever risk needs to be managed with more than just stops. Even with a strike Copper has been unable to decisively rally through and maintain above 350. I continue to think this market will move much higher in the longer term. Near term we could continue to struggle and I will be buying any major pullbacks that we see.

Grains
Grains continue to struggle and I am beginning to feel like a broken record on this market. While wheat and corn tried to begin some kind of rally the soy complex would have none of it and ended the week at new lows. These are the summer doldrums in grains and I continue to expect a harvest rally as we get closer to that time of year. Near term I continue to look for creative ways to position long these markets. I favor wheat over all the others but the biggest move, when it comes, is going to be in soybeans. This week will likely see little action for a number of reasons but do not be caught sleeping as this current quiet time will end with a loud wake up call sometime very soon.

Softs
OJ stood sill this past week but with Ernesto lurking in the Caribbean, the path of least resistance remains to the upside. I continue to target 200 and if it is not Ernesto the storm that moves us to that point there is sure to be another storm not far behind. Last week I mentioned that I was a patient bull in the cocoa market. Well my patience is wearing thin and I will be exiting my long futures and holding onto my puts if we fail to rally on Mondayâ�,��"�s open. This market cannot seem to hold onto any rallies that it has and can also not seem to hold support levels either. This could be the final shake out before the turn back up but I have this market in my review mirror by then. Coffee failed to follow through and we did in fact exit most of our coffee spread at a great profit. I continue to favor the bullish side of this market and will reenter this market this coming week with a December bull call spread. We were lucky with our call in sugar last week. For those following along, we correctly predicted the bottom of sugar last week and remain long going into next week. This could be little more than a dead cat bounce so keep stops tight and if you followed our recommendation in sugar hang onto the puts because we are not out of the woods yet! What can I say about cotton except yawn? I continue to favor the bull side here but this market cannot get out of its own way and I will be focusing on other opportunities this week. For those who insist on trading cotton I would encourage longs to protect their positions with the 54 put on Dec.

Meats
As we have seen such strong moves to the upside in many of the markets recently I wanted to take the time to put things in perspective on the longer term. We have been bullish on Lean Hogs since they bounced off of support and began rallying over a month ago. Although the market is clearly overextended in the short term, the monthly chart is showing a possible b/o from a â�,��"wedgeâ�,� consolidation. So in the near term I would expect some type of pullback, followed by continued strength, look for 65 to provide some support followed by 63. Feeder cattle have been consolidating just below the recent highs, and after looking at the monthly chart we are looking at a possible straddle at the current levels. After pulling back and filling the gap, Live Cattle resumed their uptrend and are now facing resistance from the most recent highs. Look to enter a long position if we can sustain a move above 89, with current support @ 87.

Forex Currencies
EUR/USD: EUR/USD: early in the week we saw a rather large head fake for this pair. We stopped out of a long position for a small loss as it pulled back below the resistance @ 1.29. Although the trade did not work out, by using trailing stops to minimize risk we successfully protected our equity and got out of a losing trade. Going into the weekend the pair moved back into the congestion zone between 1.275 & 1.28. It seems as if this market has not yet committed to longer term trend, so trading small intraday swings with tight stops might be your best bet here. Aggressive traders might want to play the long side from 1.275 with a stop below Fridayâ�,��"�s low, looking for a quick move back up to 1.285. Strong support @ 1.27 and resistance @ 1.29 remain key levels

USD/CHF: USD/CHF: once again we saw a test of support @ 1.22 for this pair, followed by a somewhat muted rally back to support @ 1.24. From a technical perspective I remain bearish on this pair, though I would be willing to make a quick long trade if we move through 1.2450, using a tight trailing stop for the same reasons we discussed on the eur/usd. On the other hand, if this pair does not move higher I would expect to see yet another test of support @ 1.22. If that support does finally break down it may lead to quite a technical sell off as there is no real support until 1.2050 or 1.21.

GBP/USD: GBP/USD: continued consolidation and the first sideways trade for this pair in quite a while lead me to believe the cable has good underlying strength. This type of action is actually good for a market as it allows participants to digest such immense moves as we have witnessed with this pair. If sellers are unable to force a downside b/o through 1.88 I do believe an upside follow through will materialize. I am long this pair with sell stops below 1.88 and 1.8750. If we move up from here I will switch to trailing stops to get the trade risk free as soon as possible.

USD/JPY: USD/JPY: The consolidation at the end last week led to a nice little rally up to resistance @ 117.25. If this pair does move through that resistance we could very likely see a move up to 1.19. However, looking at the weekly charts for a longer term perspective we are currently in a brief uptrend within a longer term downtrend, so at this point I remain bearish. I am looking to go short at the current levels using a tight stop above 117.75

AUD/USD: AUD/USD: This week we began to see the sellers gain control, as the few buyers that were present could not sustain any of the intraday gains. On Friday the sellers drove the pair down to support @ .7575. I would not be surprised to see a move down to support at .7525, before we get a move back up to resistance. In the last few weeks this pair has established quite a large range has given us some good short term trades, just make sure you use tight stops until we see a long term trend materialize.

USD/CAD: The support level @ 1.12 finally gave way, which lead to quite a large sell off down to 1.1050. The 1.11 level seems to be a bit more solid as it held on the NY fix. I would expect us to retrace some of the recent breakdown, but would be quick to take any profits on any long positions. It appears the sellers, although a bit exhausted here, have taken control of this pair in the near term.

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.