Energies
A strong technical breakout above $70 came as worse than anticipated inventory numbers offset an end to the Nigeria strike. The market broke above a pennant formation and key psychological resistance. Are we set for $80 crude? No hurricanes, several key refineries back online this weekend and improving supply side information out of Nigeria, and yet we see fresh highs? If the market doesn't snap back below $68 ASAP the bear argument here might be out the window and I will be forced to see a doctor about getting this foot out of my mouth. When a market surges to fresh highs without supporting fundamentals you are either in for a severe correction or a more likely bull breakout. Let us not forget that the market has been quite choppy over the past few months, and there is little to suggest that anything else but that should be expected moving forward. The slam down in natural gas is worth a hurricane long play with some cheap call options.

Financials
Stocks slid as a general decline in bullish sentiment and rising interest rates put a damper on the market psychology. A big part of the run-up in the first half of the year, which ended Friday, was due to the mergers and acquisitions activity that was historic even on an annualized basis. This activity is likely to go on hiatus as the cost of borrowed money is rising. This will cause a shift to a higher cash position in many portfolios and a general decline in the third quarter of '07. Increased geopolitical concern from this weekend's terrorist activity is not going to help matters either. Bonds did offer some price support above 105 and appear to be falling into a new midrange with more consolidation expected over the next month. Look for a high around 110 and a low at that 105 mark. The dollar is lacking the minimal bullish momentum it once had, but with the consolidation in the metals and currency markets building up, this market is likely to explode one way or the other. Long strangles in currencies are highly recommended, with a focus on the yen and euro. The Canadian dollar should have dropped considerably more last week, but I still like a short below 95.

Grains
A mega acreage and stocks report forced an anticipated shift into soybeans and soybean derivatives from corn and wheat. The big acreage blunder this year appears to be the overcompensation for corn demand and the complete abandonment of soybeans. While South America can bail this soybean problem out, it will definitely not prevent the crisis if there is a crop issue or China demand spike. The run on Friday found end-of-day weakness and lost lock limit by the close, something that will not be lost on traders. Expect selling to come in again if we see fresh highs on Monday. Sell a test of the lock limit highs on an intraday basis, with a wide stop. Corn weakness is exaggerated due to the report, but the news is out and the market psychology will turn to that of a market aware of the exposure and spiked demand. Buy grains across the board.

Meats
Cattle remains a sell and hogs a short term buy. Quarterly report after Friday's close on the pigs will set the trend longer term.

Metals
Consolidation persisted in metals this week as the market congests for an extended period ahead of an anticipated currency price expansion. Silver is a frontrunner for this sector and an indication of the sensitivity this sector has to a potential meltdown. Copper and platinum are both worth a hard look as they seem capable of complete self destruction. Palladium remains a buy.

Softs
Coffee found some mild price support above $1.10, but remains susceptible to short term selling pressure. I recommend dollar averaging into bull call spreads on the way down. OJ turned a corner on Friday as the market is bouncing after a premature slaughter. OJ supplies are questionable at best and a hurricane scare is right around the corner. Cocoa broke through 2000 as expected and the market is on a bull train that might not let anyone off for some time. Cotton broke out substantially after weather concerns and supply acreage numbers showed a true potential for this market to run this summer. Maybe it is the contrarian in me here or just that I have been a successful bear in this market for years, but I just can't buy into this move just yet. I still feel strongly that playing a snapback with some cheap puts is the best play here. Sugar is showing some buying interest for the first time in a while. On a retracement basis this market could easily run 200 points higher without much of a technical fight against it. Lumber remains a buy on its way to 340 but is not necessarily offering the same risk to reward ratio to play the move as it did back at 260.

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.