Financials
Stocks: The market has finally begun correcting. This is the start of a real correction and not just another dip. Reality is finally sinking in and with it goes the market. The reality is that our Government has simply printed too much money. In doing so they have driven us to be come a debtor nation and caused such an imbalance in trade that from where we are now just getting back to even would be a huge win, but I do not expect even that to happen any time soon. The Dow will crack 12,000 this week and should move to the mid eleven thousands by March options expiration which is the 16th of this month. Sell any rallies you can. Sell calls and or buy puts.

Bonds: Bonds reach our 113 objective and since have stalled as we expected. With the falling stock market we should see continued strength in bonds up to the 114- 16 level where we will run into more resistance. There is a possibility that Bonds could consolidate before the next rally, but not likely if stocks continue to break down.

Energy
Crude oil did try to push thru to new highs this past week but resistance at 62.00 proved to be strong and so far continues to hold crude back. Near term we could correct back below 60.00 but any dips below sho9uld be good buying points. The path of least resistance continues to be up and we continue to target a move back to 65.00 before the end of March. Natural gas has pulled back and is testing support at the 7.00 handle on the April contract. This support level coincides with the 50 day moving average so the possibility of a bounce is strong. Range trades between 7.10 and 7.90 are the best bet for the week ahead.

Metals
Metals really corrected this past week as I warned in last weeks newsletter. The fear is that the slowdown in Asia will spill over to commodities. While this is sound logic one must remember that in times of economic crisis people run to gold and silver for that matter. If the current sell off in stock markets around the world continues, and I believe it will, then money will quickly flow back into these metals. Look for Gold and Silver to stabilize this week and then begin to turn back up. Wait for a day or two to confirm that a support level is holding and then buy long calls. Target a move back to about 675 in gold and 13.50 in silver. Copper has built a solid bull flag on the daily charts and buys near 270 with stops below 265 should do well this week. The bull flag tells us to target a move back to 300 in the not too distant future.

Grains
Corn did in fact correct last week and looks to continue to correct this week. I see a move back below 4.00 near term. Wheat too corrected but is close to support. Aggressive traders could look to buy below 4.70 with stops below 4.58. Soybeans are also trading lower and near term this market could correct back below 7.00. Overall grains are a sell in the near term with wheat being the only exception.

Softs
OJ continues to be unable to decisively push through resistance. Short trades with stops above 206 are what we are trading this week. Cocoa had a big break and then recovery all in the space of last week. This market continues to be strong and I see this market pushing above 2000 within the next 30 days. Coffee failed to follow through as we had hoped and has now broken down to new lows. This market head faked us last week. For now the path of least resistance is down and the next line of strong support is not until we reach 108. Sugar did rally last week as we expected but could correct this week. Tighten up stops and or buy puts to hedge. Longer term use this and any other dips to add to the position as this market has the ability to move significantly higher in the long run. Cotton also joined the party this week and is trying to get some legs. Cotton is trying to follow through but frankly this market has disappointed the bulls so many times in the recent past that it is hard to expect this time to be different.

Meats
Both feeder and live cattle followed through to the upside and as grain prices continue to slide cattle prices should continue to rally. Keep trailing stops with the market as a fast correction is right around the corner. Lean hogs have not yet followed through after bouncing off of support but we are expecting that follow through this week. Bellies have build a very attractive bull flag and therefore long trades are the best bet.

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.