Financials 
Stocks: The Dow continues to push towards the 2000 high at 11,750. I continue to favor the bear side of this market even though it has beat me up these last few months. I am looking for the 2000 highs to prove to be solid resistance. I know that the Index itself has been manipulated and always is, through changing the companies that make up the index, but there is little if any fundamental reason for anyone to expect that the stock market is in better shape now than it was in 2000. I argue that this prolonged dead cat bounce in stocks has been fueled by low interest rates and a booming real estate market. I think by now we all know that interest rates are much higher than they were in 2000, and real estate is now suffering because of that. So it is only a matter of time before the market too notices this and begins to correct. We continue to accumulate puts on strength.

Bonds: Bonds continue to drift ahead of Wednesdayââ,¬â"¢s FOMC meeting. The Fed Fund Futures contract shows that currently traders are 100% sure the Fed will not be raising rates at this next meeting. I am in agreement but I am never happy when we are 100% sure of anything. While this would be a perfect set up for a surprise, I still do not expect one due to it being an election year here in the states. If you think politics do not play into the Feds decision, you have not been following them very long! Overall we do not expect any real movement out side of the current range until the week of the 25th of this month.

Energies
Energy this past week really sold off across the board. We were stopped out of our long Natural gas trade and for now will lick our wounds. While long term I am still a bull, I cannot deny that we are clearly in a near term bear mode. After a quick dead cat bounce, I expect Crude to test at least 60 next week. For now the path of least resistance remains down and volatility continues to increase, so only traders with deep pockets and a strong heart should be trading these markets for the time being.

Metals
Metals broke through all the support levels I mentioned last week and then some. We have clearly entered a bearish phase in metals and we will be looking at some put trades this coming week. I am expecting some kind of dead cat bounce early in the week but I will be using that bounce, if it comes, to buy puts. If we are entering a global slow down in commodities, copper is likely to fall the hardest in the near term, so keep those stops tight and or buy puts to protect.

Grains
Grains are starting come back to life but we are not out of the woods yet. I am a cautious bull of grains. These markets really need to follow through this week if we have any hope of a bull trend this harvest season. In particular I like Soybean meal. Oats continues to lead the way higher as it often does, so maybe this time it is really for real!?. We will be looking at putting on long grain trades early this coming week so watch for them.

Softs
OJ drifted lower this past week. Still no major movement but that should begin to change this week. Now that the bulk of Hurricane season is behind us, the fear premium in OJ should come out. Longer term I remain a bull based on fundamentals, but near term we are likely to see a correction back to at least 160. Cocoa continues to drift and we are now out of cocoa all together. Longer term I remain bullish but for now I will wait for a trend to develop rather than anticipate one that never seems to come. Coffee spent the week trading lower and like I said last week now that we have broken support at 105 a move to 98-100 seems like a foregone conclusion. Sugar had a nice jump to the upside but failed to close and hold above 1338 on the March 07 contact. Like I said last week, we really want to see a decisive close above 1338 before we feel comfortable calling a true bottom. Cotton continues to drift and I have yet to go long like I said last week. I would love to trade this market but with so little movement I cannot justify it until we see some kind of trend develop.

Meats
After weeks and weeks of new highs and follow through rallies, the meat complex finally saw some profit taking. Pullbacks across the board tested many of the support levels I mentioned last week and I would not be surprised to see further consolidation. Oct live cattle tested closed the week just above support @ 90, a break below that level could signal a change in the longer term outlook, as volume was quite high during the sell off. Sept feeder cattle returned to the 117 consolidation range, which is not good for our straddle, though I do not expect the market to trade at this level for much longer. Oct lean hogs bounced off support @ 65 after some heavy selling. As a result I am looking to do a 62-58 bear put spread for December.

Forex Currencies
EUR/USD: EUR/USD: For the most part this weekââ,¬â"¢s trade was limited to a 100 pip range between 1.2750 & 1.2650. This type of pause is not uncommon after such a large move as we witnessed two weeks ago. The market is simply trying to digest both the technical and fundamental factors that have emerged in recent weeks. Rest assured the market will reveal what direction it wants to go. Though it would be wise for position traders to wait for a break from last week choppy range before initiating a new position. More aggressive traders could try to play the range, though I expect the range to be broken sooner rather than later. To the downside there is some support @ 1.2650 followed by 1.2575 & 1.2480 with upside resistance @ 1.275 & 1.2825.

USD/CHF: This week we saw buyers continue to drive this pair higher. Fridayââ,¬â"¢s rally up through 1.2525 met with quite a bit of selling above 1.26, eventually forcing the pair to a close in the lower third of the bar. This is indicative of a market that wants to go higher but is running out of momentum. I would suggest caution for those traders holding long positions; bring in your stops if you are holding a profitable trade. 1.2478 should provide near term support followed by 1.2380. Upside resistance is up near 1.2705 on the weekly charts, and may come into play if the buyers can maintain control.

GBP/USD: The cableââ,¬â"¢s bounce retraced 50% of last weekââ,¬â"¢s breakdown and brought the pair back up to resistance @ 1.8875. At this point upside resistance remains quite substantial, which is why I am looking to fade this pair. Entry above 1.8895 with a stop above 1.8927 may give us a quick trade back down to 1.877. In the longer term, the fundamental picture may be changing and I continue to look to the weekly and monthly charts to assess the potential for a bull trend. I must admit that the recent volatility in this pair has left me feeling somewhat whipsawed mentally, which is why I have not yet committed to a longer term position.

USD/JPY: On Monday I entered the short position I wrote about last week. Tuesday my stop and reverse order was triggered as the pair rallied above 117.80, and I took a 30 pip loss. Using the previous highs in July and August as support I placed my sell stop below 1.1725. During Fridayââ,¬â"¢s b/o I switched my hard stop to trailing once the trade reached breakeven @ 117.80. I was subsequently stopped out of my position for a very small profit. Although the initial support level I based my stops on wasnââ,¬â"¢t violated, I did not want to let a profit turn into a loss. I still favor the long side of this pair, the risk to reward ratio is very attractive with close support and little upside resistance, at least in the short term. I am a buyer near 117.42 with stops below 117.15.

AUD/USD: Next week I expect a move out of this past weeks range, although it remains to be seen who is really in control. I am not currently holding any positions in this pair, and will not initiate one until we break above .7560 or below .7480. The close proximity of upside resistance @ .76 should limit any rally in the short term, while the distant support @ .74 is much a much more attractive on the short side.

USD/CAD: I was very impressed by this pairââ,¬â"¢s strength after such a large one day move two weeks ago. Thursday we saw quite a big head fake as the pair broke down only to quickly reverse and close in near the highs. I imagine that quite a few traders were stopped out of long positions by that move. From a bullish perspective that may provide some additional buying if this pair can move higher from here. I am looking to go long above 1.12, and will tighten my trailing stop as trade approaches 1.1275.

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.