Energies
The energy complex plummeted this week, as supply side concerns continue to diminish.  Is the market oversold?  Is the market getting ahead of itself with removing fundamental premium from the market?  The answer is yes to both questions, but letââ,¬â"¢s come back to that in a minute.  The key to looking at the fundamentals is this: We have all known for some time that the market was strong despite one of the biggest oversupply situations in this complex in years.  Nevertheless, the market was so concerned (and almost justifiably so) with potential major supply issues (hurricane in the Gulf, Iran, Iraq, Israel/Hezbollah, Alaska pipeline, Nigeria, Venezuela, etc.) that the premium remained in the market.  Now you have oversupply but declining fear premium.  So now the market can be simplified to a simple question: Will a major supply issue arise in this market in the near future?  If the answer is yes then the market is at $75, if no then the bottom could fall out of the entire complex.  Remember that what goes up will inevitably come down.  The market may be ahead of itself, but is the premature assumption going to be proven wrong?  Technically the market has retraced over 16% in one month and is in an extreme oversold condition.  I am a long term bear, but the right play is buying calls.  The market will hold up above $63, bounce above $70 and then time will tell when the market will ultimately fail.

Financials
The stock market broke key resistance at 1305 last week, and in typical fashion, failed back below after suckering everyone in long.  The market didnââ,¬â"¢t even take a real shot at 1330 resistance and is setup for significant downside on a break and close below 1291.  Bonds are resilient but are due for a retracement.  Buy dirt cheap puts and look for a slide to 108.  The dollar showed strength and broke out of its congestion.  This market is on its way to 87, then possibly 90 and higher from there.  Dollar bears need to wake up and smell the subtle economic policy the Fed is implementing here.  Get euro puts, yen puts and maybe a Canadian dollar bear play if you can get a reasonably entry.

Grains
Grains were choppy and offered congestion this week.  We are getting into harvest and the market is looking at a banner bean and corn year.  However, when weighing exposure to supply and demand issues versus current market expectations and pricing, I would say this is a value buying point.  Get long beans, corn, wheat and rice with futures and use a put as protection.  Give it 3 months and we should be at least 10% higher.

Meats
Cattle turned south on Friday and is setting a nice top.  The trade of the month (+1 Live Cattle Oct. 93 put and -1 Live Cattle Oct. 90 put for $400) is a great approach to this overbought market, but buying straight OTM Dec. puts is another solid long term way to play the pullback.  Hogs and bellies are showing bearish congestion, but I would focus on cattle as the pigs have a slightly better technical setup to see price support.

Metals
Gold and silver collapsed as the suckers rally gave way to a volatile failure.  A strong dollar should force lower prices in metals and scare some of the long term bulls out of the market ââ,¬â€œ more downside ahead.

Softs
Sugar broke through key resistance at 1198, but failed to close above that mark.  Fridayââ,¬â"¢s option expiration should setup a volatile start to next week.  The European Union lost a WTO (World Trade Organization) ruling to export all its access sugar, which sets up a bull turn for this market as the supply situation gives the market pause during its recent collapse.  Get long March calls in a hurry, before the premium comes back into this market.  OJ is strong despite declining hurricane concerns.  The threat is still out there for a few weeks and I suspect the rally isnââ,¬â"¢t over.  Coffee pulled back after developing a strong technical setup.  I remain a buyer of bull call spreads as the move higher is in the cards for this market.  Cocoa is still a buy heading into elections.  Cotton is a strong sell, especially with weakening technicals.  Lumber may just give us that better entry price, so look to be a buyer around 245.

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.