Financials
Stocks: The incredible weight of the falling Dollar will almost surely break the back of this bull market. Do not ignore what has happened to the Dollar this past week. It is no surprise that this move happened while most of us were away on holiday. Look for the stock market to stage one final rally before turning lower and beginning the next wave of the bear market. I have been rattling my saber about this for a while but donââ,¬â"¢t think it is just another case of crying wolf. As economic reality sets in over these next few weeks no amount of holiday shopping can keep this house of cards standing. And this idea that the Fed. is going to save the day by lowering rates is also krazy.

Bonds: Bonds managed a quick head fake last week that stopped out many shorts and stopped in many new longs. This should prove to be the end of the bull run in bonds as well as stocks. How can both stocks and bonds go down at the same time you say? Simple, with an inverted yield curve and rising interest rates around the globe our Fed. Governors can do little but follow the trend.

Energy
Energy prices continue to trade within the range we have talked about for months now. Near term we see more of the same. These markets are starting to show signs of a breakout to come. We are expecting the breakout to be to the upside when it comes. Look for crude oil to rally back into the mid 60ââ,¬â"¢s before Christmas. Distillates will of course follow crude up as well. Natural gas will likely lead the charge to higher ground so look for a breakout above 850 this week.

Metals
Metals broke out of the sideways range last week and are now making new highs. We continue to target a move above 650 in Gold and 14.00 in silver, but frankly this bull in metals is still just getting started. We are going to see massive moves against the Dollar and metals will be one of the main beneficiaries. As the weakening Dollar continues to slide, look for that to break the back of the bull in both stocks and bonds. That money then needs to go somewhere, and much of it will find its way to the ultimate safe haven which has always been gold. We are on the verge of a financial paradigm shift and this is not time for complacency. Buy metals now or wish you had later. I have seen many very intelligent traders ignore these shifts in years past and most of them are now painting houses instead of trading. Donââ,¬â"¢t ignore the signs along the road; they are there to help guide you.

Grains
Grains too will take there lead this week from the falling Dollar. Look for strength in grains going forward. I continue to favor wheat over corn in the near term. The soy complex stands at a critical point this week. If beans can remain strong and rally above 7.00 then we could really begin to see some momentum in this market. Caution is still advised as this overall shift away from the Dollar will not happen overnight, (though it looks that way in the currency markets!) but rather a slow somewhat orderly transition is much more likely. Large downside risks still loom over the grain complex so owning least some protective puts is advised.

Softs
OJ continues to drift and we continue to accumulate or spread puts. A retest of the October lows is not at all out of the question. Cocoa is now poised for a strong rally to and through 1650 over the remainder of this year. Coffee had a great consolidation and should now be able to retest the Jan of 2006 highs at 125.00. 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 is trying to bounce and we need to see the market push through 57.50 before calling an all out bull market. Overall I continue to expect the soft market as a whole to be much stronger in the next 3 months than it has been over the past 3 months.

Meats
Dec Live Cattle are consolidating near 88 and if this market can push above this recent range look for a move back up to 91 in the short term. Jan Feeder Cattle seem to have stabilized near 100, though I expect the grain markets to continue to plague cattle in the near term. Resistance is near 105 and support near 93. Dec Lean Hogs are approaching expiration and look for resistance near 64 to contain the upside of this market.

Derek Frey is Head Trader at Odom & Frey Futures & Options.

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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.