Energies
An impressive technical week for the bulls in energies was brought back to reality when Fridayââ,¬â"¢s downgrade of the 2006 energy demand forecast by the IEA gave back much of the weekââ,¬â"¢s gains and put crude right on key support heading into next week.  Short term, the outlook is very dependant on whether crude holds some key nearby price supports (58.88, 58.12, 57.60 and the lows at 57.05).  If we get a flat to up day on Monday it will likely turn the market bullish and set the tone for fresh near term highs.  I continue to recommend long calls with a decent amount of time to expiration.  This is an excellent time to go long heating oil and short unleaded gas (1 to 1), especially with a compliment of long crude oil calls.  Natural gas is stuck in a volatile and choppy price band and needs to get back above 8.50 to regain the bullish momentum that could easily push this market through 10 with the support of a broad based energy sector rally.

Financials
Stocks continue to push up against resistance just below 1400 on the S&P, but overall this is a market with uneducated money flowing into funds and one of the longest dead market bull runs in history to retrace from.  I continue to see the top as in and the market as a strong sell at current levels.  Bear put spreads and put ratio breakdown spreads are recommended.  Bonds went the whole week without a negative close and essentially recouped the one day plunge from last Fridayââ,¬â"¢s employment report.  This is a chart that screams ââ,¬Ëœfresh highsââ,¬â"¢, but a gut that screams ââ,¬Ëœsuckers rallyââ,¬â"¢ even louder.  Key resistance at 113-11 (113-18 to avoid the suckerââ,¬â"¢s stop out) will tell the story, but this is not a fundamental setup for more upside.  The dollar weakness is approaching a questionable technical retracement area, with more news of China shifting away from the US dollar causing downward pressure in the market.  If we do not support out above 83.60 then there is little to suggest that the market will avoid a test of 80.50.  I remain a dollar bull and see the current levels as a buying opportunity.  Euro and yen puts are worth a hard look.  The Canadian dollar needs to break down quickly otherwise momentum will turn bullish.

Grains
After pre-report rallying, the market got a bearish supply/demand report and saw grains reverse with wheat leading the pact as expected.  It is too soon to say the market has topped but this is a great time to buy corn and bean puts as the premiums remain dirt cheap despite a short term turn in market momentum.  The news of China importing a bunch of beans brings about memories of the rally to double digits in beans the last time China was thirsty for the commodity.  I am inclined to see the news as a one time market shock, but if we get wind of another buying spree I would turn bullish in a heartbeat.  Rice remains a buy.

Meats
Cattle saw some price support this week but remains in a bear trend begging to collapse.  Hogs got some weakness as concerns over slaughter numbers has the market turning after testing a recent technical top.  Watch out if we break key gap support at 61.50.

Metals
Metals stalled a bit and are a technical sell after a strong rally.  The sector is approaching key resistance in silver at 13.37 and gold at 648.70.  Copper failed as European demand is less than anticipated and the market is looking ugly.  Short futures with a call as  protection for those who are not too risk averse.  Platinum ran $140 in 4 days and stalled, and then broke through the newly formed pennant to fresh highs.  This market is on a serious run, but when it falls it will fall hard and fast.

Softs
Bullish sugar action came on the heels of smut fears in Australia and a turn in the short term technicals.  Fridayââ,¬â"¢s retracement was mainly due to weakness in energies and a lack of fundamentals driving the market.  This is a long strangle opportunity if I have ever seen one.  Coffee started its projected rally to $2 (I know it is a gutsy call but I always callââ,¬â"¢em like I seeââ,¬â"¢em and this market has all the makings of a bull run).  You can still get your hands on some bull call spreads fairly inexpensively.  Cocoa started its bull run too, with swollen shoot virus and political concerns are driving this market.  Cotton has so much positive PR on the bull side form analysts that it is a contrarian bear indicator in and of itself, let a lone the long term history of the market suggesting a major breakdown coming.  Key support at 48 is the only thing holding this market up.  OJ is low volume and choppy since its gap higher and nothing that we are seeing is an indicator of the next big move.  A long strangle is recommended.  Lumber remains a sleeper buy with OTM calls to define risk.

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.