Energy Complex (NYMEX)
Crude Oil
Crude oil is still pushing back towards the old highs. The trend is strong and we would advise buying any dips towards the lower end of the trend line on the daily charts. Crude oil could easily test the old highs later this summer and frankly we feel that it could test the mythical $100 level if we see continued increases in terrorist activity, especially if it happens here in the US. Natural gas remains under pressure (another pun!) but we still feel this dip represents one of the best buying opportunities of the summer.

Equities
SP500, DJIA, NASDAQ
Stocks continue to be strong and even shrugged off last week's terrorism in the UK. This is a clear sign that the stock market is on its way towards making new highs. This market continues to bait more and more dumb money into the markets and will only turn back down once all the big guys have dumped their positions on the under informed. Make no mistake about this is a top. If you have been trading for more than 10 years than the current state of the market should feel eerily familiar, sort of like the way it felt in say 1987 or 2000. Do you recall how the market could do no wrong back then as well? We all know how well that worked out. So why do people say that this time is different? I guess hope springs eternal. The short term path of least resistance remains up for the time being but do not get married to any of your positions as it is very unlikely that this time is in fact different.

Financials
U.S Bonds

Bonds are trying to stage a rally and should claw its way back above 108 by the end of the week. Look for yields to test the 5.00% level later this month.

Metals
Gold, Silver, Copper

Gold broke out of its downtrend today and should be beginning the next leg up. This one should push through 700 later this summer with ease. Buy or spread calls to play this next rally. Silver has not yet broke out of its down trend the way gold did but we feel it will play catch up here this week and into next. Look for a fast move that carries silver back above 13.50 later this week. Copper continues to push towards our 380 target we mentioned in the last issue. Frankly we see copper exceeding 380 and retesting the old highs above 400 before this current rally stalls.

Grain Complex
Corn, Soybeans, Wheat

Wheat managed to stabilize near the 6.00 level and could resume the rally later this week depending on how the next round of crop reports comes out. We still favor the long side of wheat over corn. Corn has bounced but it looks to us like it is forming a bear flag indicating that there is more downside yet to come. Soybeans have been the strongest grain so far this season, we are approaching our target of 9.00 which should be hit later this week. We will unload about 50% of our position on that target and then trail a stop on the remaining position and see if this market can in fact make it to 10.00 and beyond.

Softs (NYBOT)
O.J, Cocoa, Coffee, Sugar, & Cotton

OJ is consolidating but we still feel our target of 150 is reasonable. We are looking to spread long 140 calls against short 160 or 170 calls later this week. Cocoa continues to push higher and we remain long. Volatility in this market should increase in the next two weeks so do not chase this market if you are not already long. Coffee does look like it is going to test the 105 level sometime soon and as we said last week use this dip as an entry opportunity as this market has great long term potential. Sugar is starting to turn a corner here and we are accumulating 10 and 11 cent calls on pullbacks and advise readers to do the same. Cotton has really taken off and we feel our target mentioned in last weeks news letter is too low. We targeted a move to 70 by the end of the 3rd quarter last week but frankly feel that it could happen by the end of the summer rather than the end of the 3rd quarter. Buy the Dec. 70 calls on cotton and hold for the next few weeks.

Meats
Lean Hogs, Live/Feeder Cattle, Bellies

Live cattle reversed and stopped out our short trade with a small profit. At this time we are on the sidelines waiting for confirmation that this recent turn is not another head fake. Feeder cattle really took off and we did miss it but you cannot win them all so we will simply wait for the next signal in that market but near term the trend is strong and the path of least resistance is clearly up. Hogs had the dead cat bounce we warned you about in last weeks issue but is now turning back down and should push well below 70 later this week. Pork bellies continued lower and we continue to hold our short with a target now below 84.

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.