Energies
A strong rally in energies came on the heels of a cold weather front coming into the north east, a massive last trade day 50 cent rally in Dec. unleaded gas and private reports of OPECââ,¬â"¢s production cuts actually being followed by members during the month of November.  This is the first genuine rally attempt by the sector since itââ,¬â"¢s 25% plus decline and if we see a break through 65.75 on Jan. crude it will be a significant technical breakout to provide momentum going forward.  The overall market condition has gone from bearish to neutral and spikes in call premium volatility is finally coming together.  I continue to recommend call buying on dips across the board in this sector.

Financials
A wacky week in the stock market saw a swift market decline below key 1394/1398 support on the S&P and an immediate rally back through that point on key economic reports.  There are few things that bother me more than watching those moronic analysts show up on CNBC and say this is a ââ,¬Ëœmuch needed retracement that will lead to fresh highs in the stock marketââ,¬â"¢ and actually watch them be right.  That is what suckers hard working consumers into throwing their money at fund managers at the peak of a market.  This market is in desperate need of a MAJOR market correction.  The vacillating back and forth here is a big warning sign.  We may even see 1450 but it doesnââ,¬â"¢t matter.  Without a major correction the entire long term history of the stock market is wrong.  We are in a cyclical downtrend in this sector.  In cyclical stock market downtrends, which generally last 16-20 years, it is often assumed that the market heads down almost every year.  This is in fact historically inaccurate.  The market actually has, on average, more positive years than negative years, but over the 16-20 period has a net negative result.  What this should tell you is the rallies only represent a taste of the strength of the declines.  This also means WATCH OUT.  The bond market seems to be wildly out of control as the expectation of a rate cut within the next 5 months is virtually built into the market.  The Fed is no closer to (in my opinion they are no where near) a rate cut than a rate hike.  However foreign buying and overall market sentiment has pushed bonds higher without fundamental backing for some time now, so why should it stop now?  The bond market will need to play catch up when the Fed puts its foot down.  Buy long term bond puts now for two reasons ââ,¬â€œ the retracement is coming and the puts are so cheap it will feel like they are paying you to take them.  The dollar is getting crushed far beyond my long term expectation.  My overall outlook on the dollar remains bullish but I am more than willing to admit short term defeat here.  I continue to see the dollar in a long term view, as I have said in previous reports, and highly recommend taking advantage of what will be viewed as a long term historical value a few years from now.  Euro put spreads, yen puts and even a Canadian put spread if we break below 87 are all highly recommended.

Grains
Thursday was a wild day in grains.  After a morning rally we saw strong selling right near the close - collapsing the corn market and weakening the rest of the sector, only to see a massive surge right on the close to leave us near the respective daily highs.  Friday was telltale though as the market gave into the previous dayââ,¬â"¢s weakness and setup a possible collapse next week.  Thursdayââ,¬â"¢s highs will be critical resistance moving forward.

Meats
The cattle market followed a Mound Ladletm formation with a solid failure.  It is critical for Feb. to fall below 87.75 without breaking back above 91.10 to continue the pattern and start what could be a legitimate market collapse.  Moreover, it should happen very quickly ââ,¬â€œ by Wednesday in an optimal scenario.  Keep a close eye on this market.  Hogs have developed a nice bear chart after failing to break through the highs, but will likely only see another 2 points down before finding support.

Metals
Gold and silver surged through key resistance and both remain bullish amid a U.S. dollar meltdown.  I suspect this is a suckerââ,¬â"¢s breakout, but that will only be confirmed on a gold close below $640 and a silver close below $13.40.  Copper is giving a decent short entry for us bears out there.  Platinum is a short with a stop at $1205.

Softs
Coffee is on the move and it got the caffeine jolt it needed to maintain momentum on Fridayââ,¬â"¢s late day surge.  Look for a quick dip and then a major spike higher in the coming weeks.  Sugar is on the move as well, as news of Brazilââ,¬â"¢s beefed up ethanol demand has the market in rally mode.  A break and close above 1290 is needed to confirm the intermediate term trend reversal.  Cocoa is surging on what many believe are fundamental issues in the Ivory Coast.  This is not true!  While I am a long term cocoa bull, this weekââ,¬â"¢s rally was simply based on a very well known newsletter writerââ,¬â"¢s recommendation to buy cocoa calls.  In a market like this you can see a 100 point rally when someone gives the order for a mass purchase of 100,000 call options.  The floor traders are going wild here and running this market up.  It may never look back, but donââ,¬â"¢t let the reports fool you as to why this happened.  I will say there is nothing to stop the combination of good fundamentals and a ton of new speculators going long this market to help sustain this bull run.  OJ is beginning to show signs of life, but this weekââ,¬â"¢s bounce is not bullish until we close above fresh highs.  It is, however, a sign of pending volatility.  Lumber remains a buy.  Cotton is still a short.

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.