Financials
Stocks: The market did test the 12,000 level last week as we mentioned it would. We have since bounced and at this point we could see a sustained bounce this week. It all really hinges on how the FOMC decision is interpreted Wednesday afternoon. The market seems to want a rate cut and frankly we do not see that happening this meeting so they are likely to be disappointed. We have seen the market turn garbage into roses more than a few times in the recent past so this meeting could be more of the same even if they do not get the rate cut that they want. Overall the trend is neutral right now and it will take a large catalyst to break us out of this range.

Bonds: All eyes are on the FOMC meeting this week. We will be doing a strangle or straddle in the 30yr. T-Bond Wednesday to try and take advantage of volatility spikes on the day of the rate announcement. The Bond market has also been hoping for a cut in rates and if that does not come then the likely path will be lower. We expect a break below 112 at some point this week.

Energy
Crude oil continues to pullback and we now have a downtrend forming. We have strong support between $52.50 and $55 so look for a bounce as we test that level. Near term there seems to be a lot more downside pressure on energy than upside potential. Sell rallies and look for crude oil to retest the support level mentioned above. Natural gas is also trending lower, next downside target is a move to 6.500.

Metals
Metals continue to be strong. Near term we continue to expect a move back to some old highs. First target for April gold is a move back to 680. Silver should bounce back to at least 13.50 near term. Copper has now hit our objective of 300. Move stops on longs up to 289 or higher depending on your tolerance for risk. The trend is up and looks strong so higher prices are the expectation this week. We could see a move above 320 before the end of March.

Grains
Corn did sell off to our target of 4.00, and still looks weak. This market could continue to move towards 3.60 in the days and weeks ahead. The trend is down so don’t fight it. Wheat stopped out our long trades last week. This trend is also down. A move below 4.50 seems very likely this week. Soybeans are holding support at about 7.50. Long trades with stops below 7.34 are the best trades we see in beans this week.

Softs
OJ bounced but is still a sell. We would need a close above 205 on the May contract to change that sell to a buy. Cocoa continues to trade between 1750 and 1800. We continue to see this market pushing through 1800 on its way to 2000. Coffee remains weak until we test support at 108. Sugar has been weak, and a quick look at the COT report tells the story. Small traders piled into this market in recent weeks while large traders and commercials have either gone short or paired down their longs. More downside is expected as the small traders get washed out. Cotton did not push through 55 and remains range bound. This market cannot get out of its own way and for now is neutral at best. Wait for a break below 53 to go short or a rally above 55 to go long.

Meats
Live cattle did pull back as we warned last week. Support at 94 on the June contract could turn this market around but wait for a few days of confirmation before going long again. Feeder cattle have been stronger than live and that trend is expected to continue this week. Stops on the April contract should be moved up to 105. Lean hogs broke down erasing the bullish set up we had last week. Hogs should drift lower at best this week, target a move to 62.50. Bellies also took pulled back and for now aggressive traders can go long the current price with stops below 102. Target a move above 110 this month.

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.