Financials
Stocks: As I mentioned in my opening comments, the stock market looks poised to correct. I am even going one step further and saying that this could be more than a simple correction and in fact end up being the resumption of the bear market we were in the early half of this decade. With all the things happening in the world, it is a wonder that our stock market has managed to hold itself up this long. Please head this warning and at least put stops in your long trades or better yet hedge your downside exposure by buying puts.

Bonds: Bonds are now pushing higher than I had expected, but here to I think it is only a matter of time before this market also turns a corner. However, in the near term, we are likely to see more upside in bonds this week as stocks begin to correct. The first line of defense for stock traders is to run to bonds, but as inflation continues to rear its head, the Fed will have little choice but to raise rates, regardless of what that does to stocks and real estate in this country. This is global phenomenon, and we do not live in a bubble. What happens around the world will affect us whether we like it or not. Look for bonds to rally to about 115-13 before and major resistance is met.

Energy
Energy prices did what we have been calling for this week, and we are now on are way back to at least the mid sixties in Crude oil. Natural gas had a breakout that failed to follow through, but we view this as a buying opportunity. Energy moves in fits and starts most of the time, so look for volatility to increase this week. If Crude oil somehow manages to fall back below $60, look for OPEC to intervene with another production cut. Either way, energy is poised to rally, and we are targeting 65-67 a barrel on crude within the next 10 or so days. Natural gas is also in rally mode and we are targeting a fast move to and possibly through 10.00 near term.

Metals
Metals also reached our objective from last week, and we continue to be bullish. There is always the threat of a correction, and in fact I am hoping for one so I can buy even more at a cheaper price. Overhead resistance in gold lies at 660, so we could see a stall as we approach that level. Silver has little resistance until $15.00 and is likely to test that level this coming week as well. Copper has not yet followed gold and silver higher, but it is only a matter of time. I continue to see copper as one of the best buys still left to be had this year. Overall, the bull is alive and well in metals as the freefalling Dollar continues to push these markets up. Also, after stock traders run from stocks to bonds, and after bonds then also turn lower, there will be nowhere left to run to except gold, but by then, it will likely be trading over $700 Concerned stock traders should pass on moving to bonds and instead move directly into Gold.

Grains
Grains continue to push higher, and we continue to favor wheat over corn at this time. The long wheat short corn spread is quite attractive right now. Soybeans spent the week drifting sideways which should lead to some follow through to the upside near term. A move to $7.00 in beans seems like a foregone conclusion and is likely to happen this coming week. Oats have also made a classic bull flag pattern which traditionally points to higher prices to come, a move back above 280 looks more than reasonable.

Softs
Our expectation of a correction in OJ looks to have been premature, but this market continues to struggle with 205. I remain a short term bear and am looking for a hard and fast correction to at least 190 near term. A retest of the October lows is still not at all out of the question. Cocoa is breaking out as we expected. Ghana and the Ivory Coast have never been peaceful in recent years and a new battle with rebel forces looms on the horizon. Couple that with an ever increasing root fungus problem, and you have the makings of a run away bull market. 1600 -1650 is this weekââ,¬â"¢s objective but look for much larger moves in the longer term. Coffee not only hit our objective from last week but ran right through it. Sugar is about to take of so get on board before this train also leaves the station. Do not forget that sugar is becoming a quasi energy contract and with crude moving up sugar is likely to follow. Cotton is starting to bounce, but I have been burned in cotton many times before. Therefore, like I said last week, until we move above at least 56, I will remain cautious. Overall, I continue to expect the soft markets as a whole to be much stronger in the next 3 months than they have been over the past 3 months.

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.