Financials
Stocks: Nothing seems to be able to hold this market back. Even in the face of negative economic data this market rallies. Any of you who have traded for many years know that this is a sign of a market that as Mr. Greenspan famously put it is full of â�,��"irrational exuberanceâ�,�. This market can only defy gravity and reality for so long. Long term historical trends point to a need for this market to further correct. We continue to be bearish though so far this trade has not worked but do not be tricked by this market. Continue to protect you upside gains by buying puts.

Bonds: Bonds continue to toy with 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 or above. This could be one of the best trades for the rest of this year, as more and more conflicting economic reports come out we will see this market drift back to 110.

Energy
Crude oil did in fact manage a downside breakout as we warned here last week. Crude oil is now likely to test first support near $55 per barrel and possibly even $50 in the near term. These weakening energy prices will give stocks there last gasp rally and will also likely prove to be one of the best buying opportunities in energy for this winter. Look for a choppy trade that is biased to the downside for this week. Natural gas is likely to be the exception, look for strength in Natural gas this week in the form of an upside breakout of the bull flag we have formed.

Metals
Metals spent this past week drifting sideways for the most part. We continue to see upside strength in metals. We continue to target 650 in gold and 14.00 in silver. Near term I like long silver against short gold but overall I am a bull of both. Copper is a strong buy. Last week I mentioned that this is the final downdraft in copper before we enter the next phase of this bull market. Copper is not a market that end users can choose not to use. It is a need, not a want, so look for the continued need for copper to show itself as Asia continues to come more and more on line.

Grains
Grains continue to be all over the map but the overall tone remains sideways to negative. We are accumulating puts on strength. The long wheat short corn spread I mentioned last we remains attractive so take a look at that chart if you havenâ�,��"�t yet. The soy complex seems to be the most vulnerable to a sharp downside correction in the very near term so be warned. If Jan beans can manage a break out above 685 then it would be back to the races so short futures traders should have stop or stop and reverse orders placed above that point.

Softs
Last weeks sharp rally in OJ is exactly why I was advocating tight stops on our short trade. We continue to favor the short side of this market in the near term. We just recommended a put spread to our clients as a way to take advantage of the overhead resistance this market has run into. Cocoa is even more attractive after the two sided swings we saw late in the week. This kind of action often precedes a breakout so look for big moves in cocoa in the coming weeks. We remain biased to the long side via our swing trade. Coffee had a late week correction and we are likely to see some follow through early this week. Look for strong support near 110 to hold. Buy this dip in coffee with stops below 110 support. 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 life 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 caught a bid near the end of last week and this strength may continue if the grains pullback further. Look for resistance near 88 & 90. Jan Feeder cattle supoported out near 95 and if this level can continue to hold I believe we could see a rebound in this market as the fundamentals return to the forefront. Dec Lean Hogs have pulled back to the support near 61 that I mentioned a couple weeks ag, and the recent price action looks to have formed an idsland reversal. If that pattern can hold expect further downside. Though the market continues to have strong support @ 61 and resistance @ 64.

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.