Financials
Stocks: Stocks continue to drift sideways and show little sign of a directional move in the near term. The fact that the Democrats control both the house and the Senate has the market a bit scared and rightly so. Look for resistance on the Dow to hold and a test of the lower end of the range is very likely by the middle of the week.

Bonds: Bonds zoomed right back to resistance at 113. I do not see bonds being able to push through 113-16 so look to buy puts or initiate shorts with stop and reverse orders at 113-21. For bonds to break out to the upside would imply that the market expects the Fed. to lower rates in the near term, and trust me when I tell you that this is not going to happen.

Energy
Crude oil continues its range bound trading as I have mentioned here in past issues. We continue to buy long at or near 58 with stops below 57 and sell short at 61 with stops above 62. I see little on the horizon that can break this market out of the range but these things never last for very long so if you are going to attempt these trades next week you should consider using stop and reverse orders. Natural gas is forming a classic bull flag and a move to and through 8.50 looks very likely in the near term.

Metals
Gold continues to climb regardless of the Dollar or anything else for that matter. Gold climbing as strongly as it has this past week kind of makes me wonder if Gold knows something that the rest of us donââ,¬â"¢t. I believe gold is taking off ahead of a financial crisis not yet on any other radar screen. Be warned, sharp moves up in Gold are rarely a good sign for our economy. Look for Gold to make a run towards 650 this week. Silver is toying with resistance at 13.00 but will make it through on its way to 15.00. We will not get all the way to 15.00 this week but we should at least see a move to 14.00. The breakdown in copper is nothing more than a shake out so get in there and buy this market. Strong support lies just below 300.00 so get long and run stops below that point and hold on cause this market is going back to 400.00 before you know it.

Grains
Look for grains to continue to churn in the near term. Wheat in particular looks like it will correct to at least 450 before this correction has run its course. Corn and beans have been slower to correct but look for that to change this week. We have made a lot of money going long corn against short wheat these past few weeks but we are now reversing that trade and going long wheat against short corn as an inter-market spread. Overall grains need to digest all the recent movement so an overall sideways grain market is what we are expecting this coming week.

Softs
So far our short OJ trade that I mentioned last week is working out quite well and our stop is now working at our entry point so we have an all but risk free short OJ trade on now. This market is likely to begin to move back up this week so reel those stops in even more if you are short. In fact stop and reverse order are the best bet here as a move to 210 seems very likely before Thanksgiving. Cocoa looks to getting ready for a very strong bull run. I here whispers of continued unrest in the Ivory Coast which should push this market back up through 1600 in the near term. We just recommended a cocoa long swing trade using a protective put instead of a stop to our clients. Take a look a cocoaââ,¬â"¢s longer term monthly charts and you can see that this market can really take off and move when it wants to and I think we are very near to seeing that. Coffee had a very strong week only to end it correcting a bit. Not much of a surprise that we had a strong correction on the very day of December options expiration. Look for the bull to resume next week now that we have gotten through expiration. We are targeting a move to 125 in the near term. Sugar too is trying to turn back up and I suspect it will before much longer. Buy long on a break out above 1280 on the March 2007 contract. Cotton to is starting to show signs of live but we are far from calling for a break out in this snoozer. Overall I am expecting the soft market as a whole to be much strong in the next 3 months than it has been over the past 3 months.

Meats
Dec Live Cattle had a good reversal day on Wednesday and had some good volume on Thursday and Friday. I think this market may finally catch a bounce, especially if we can see a further pullback in the grains. Look to buy a break above 86. Feeder cattle also formed a hammer on Wednesday and remain oversold. I am looking for a move up to and possibly through 100 for jan. The straddle I mentioned last week in Lean Hogs began to come alive on Friday as the market broke out of its recent range look for this market to push towards 61.50 before it maybe able to get some support from buyers.

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.