Energies
The energy market has seen strength and a resumption of a possible bull breakout despite benign winter weather.  OPECââ,¬â"¢s promise to make further supply cuts has been met with some doubt, given the recent inability to enforce previous cuts.  Traders are coming to the realization that the current oversupply is likely priced into the market, while potential supply and demand threats have begun to out way the now discounted price of the market.  The takeover of a Royal Dutch Shell oil facility in Nigeria following the OPEC meeting did not go unnoticed by the market.  Critical resistance on the Feb. crude contract is at 65.40 and 66.30 respectively.

Financials
As the peak of the holiday approaches the stock market eases into light volume mode, despite a week of significant economic reports that lie ahead (current account, GDP, housing, etc.).  Strong retail sales and benign CPI numbers have the market in rally mode, but profit taking before year end is likely.  If the market repeats last yearââ,¬â"¢s action then we could see strength through the year end and a severe decline in the beginning of January.  Regardless of exact timing, the market is overdue for a correction and I highly recommend bear spreads in the S&P.  Bonds showed weakness, albeit choppy, and a potential top as traders seem to be concerned that they have factored in a Fed rate cut in the near future without merit.  I suspect a down Monday confirms bearish momentum and a quick move to 110.  The dollar has gotten a boost on impressive economic news and is a strong buy on any dips.  As I have said numerous times over the past several weeks, the dollar is not falling apart.  This is the time to play long dollar against a short euro, yen and Canadian $. 

Grains
Tradersââ,¬â"¢ eyes are on demand this time of year, with the highs set in on the grains (corn at 3.93 on the March contract is the high to watch).  Unless China starts a buying frenzy these markets are heading south.  Puts remain dirt cheap.

Meats
A battle between the US and South Korea over accepting US beef, along with an upcoming cattle on feed report on Friday, has the market stuck in between critical near term price support (87.75) and resistance (91.10).  The consolidation pattern remains bearish, but I continue to look for a break and close below 87.75 before going all-in.  Hogs have broken trend line support, but the gut says look for a trend shifting bounce this week.

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Metals
A metals meltdown has the gold bugs a bit nervous as the U.S. dollar shows signs of supporting out.  Silverââ,¬â"¢s $1 plunge is not the last bit of volatility we will see in coming weeks.  Buy puts and sell call premium on a 3% bounce ââ,¬â€œ if you get the chance.

Softs
Coffee showed a 1.30 double top and a strong reversal on Friday, but the long term outlook with Brazilââ,¬â"¢s ugly supply estimate remains overwhelmingly bullish.  Expect a multi-country supply squeeze to catapult this market to $2.  Cocoa futures remain strong as numerous fundamental issues and strong spec demand have this market flying high.  If you missed this move the gut says you will have another shot ââ,¬â€œ optimal entry target is at 1530, but I would start scaling in around 1570 if the market retraces.  Sugar continues to be a great long strangle play.  OJ volume is dying and the market is setting up for a holiday explosion ââ,¬â€œ long strangles recommended here as well.  Cotton remains a sell.  Lumber is worth looking at some March OTM calls. 

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.