Energy Complex (NYMEX)
Crude Oil

Crude oil is still pushing higher and now trading around $75. Think about it, if crude oil can get this high without a terrorist act or a hurricane anywhere in sight, how much further can it go when we do see terrorism and or hurricanes later this year? Both of these events by the way are all but sure things. We could easily see crude touch the mythical $100 a barrel level later this summer if or when either the terrorists or hurricanes strike us next. Natural gas remains stuck in a downtrend even in the face of a heat wave across much of the country. We continue to feel that buying this low will be rewarded later this summer. Spread long natural gas against short crude oil.

Equities
SP500, DJIA, NASDAQ

Stocks have broken out to new highs and are now struggling to hold onto those gains. We continue to see the path of least resistance as being up. Near term, look for the DOW to push back through 14,000, and look for the S&P to inch ever closer to the 1600 level. While we are near term bulls we are also very defensive as our models show a strong likelihood of a dramatic pullback sometime in August. Do not try and stand in front of this freight train as it is likely to push higher than many people suspect. At the same time this is no time to be complacent. Lock in paper profits with trailing stop loss orders and or purchase puts to lock in those paper gains.

Financials
U.S Bonds

Bonds ran straight through 108 last week. We continue to like the long side of this market and expect them market to test the 109 level later this week. This week we have little in the way of reports so the next push higher will be technically driven.

Metals
Gold, Silver, Copper

Gold continues to push towards our target of $700. We see great things coming out of gold over the long haul and do see gold testing the infamous Hunt brother highs before the end of the year. Silver has consolidated near the 13.50 handle and near term our outlook for this market is similar to gold: more upside from here. We are targeting a move back above 14.00 by months end. Copper continues to trend higher and we continue to buy dips as they come. We still see 400 being tested later this summer. Talk of growth in China slowing, are way overdone. A country that big, cannot slow demand that quickly. It is not like all the construction projects currently underway are just going to stop. Even if they do not allow a new building to be built in all of China for the next few years it will take at least that long just to complete what is already under way. This means that copper and all other building materials for that matter will continue to be in high demand despite reports to the contrary.

Grain Complex
Corn, Soybeans, Wheat

We are seeing a number of signs of potential trend changes in the grain markets. We typically see grain markets rally into the middle of summer and then begin to pull back as harvest progresses. This is the historical norm of the grain complex so keep that in mind while you are making plans to buy your next plane with your profits from beans going to the teens. While beans may finally claw their way into the teens, history shows us that it is not likely. If beans fail to hold support above 8.00 then we could see a 1-2 dollar fall before the end of harvest. This week that 8.00 support level is critical. Wheat too needs to hold support above 5.75 or it could also fall 1-2 dollars into harvest. We believe that corn is leading this complex and the fact that it is almost back below 3.00 is more proof to us that the highs in grains this year have already been put in. We are taking profits on all of our long wheat and soy against short corn spreads and are looking to reenter these spreads from the opposite direction. Meaning that we are now looking to go long corn against short wheat, and or soy.

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

OJ is trying to get a rally started but with no threat of any hurricanes so far, the market is left waiting for something to get the next trend started. We continue to see the downside as limited and are advising clients to spread the 150 calls against the 180 calls. Cocoa started to pull back but has since rallied back up near the highs forming a bull flag. We will continue to hold our 1950 puts as we still see the potential for this market to pull back to 1900 or below within the next few weeks. Coffee hit resistance at 115, we see today's dip as a buying opportunity as we expect coffee to trade above 120 later this summer. Our models show that sugar has hit a near term top. We are expecting this market to fall back below 9.50 in the near term. We will use this next pull back to position us long for the longer term as we see this coming pullback as one of the last ones before a real change in trend. Cotton clearly broke the up trending line on the daily charts early last week. We do see this dip as a fresh buying opportunity but have not yet gotten a clear buy signal. We would advise readers to spread long calls in the Dec. contract on this pullback.

Meats
Lean Hogs, Live/Feeder Cattle, Bellies

Live cattle looks like a strong buy. We could see a rally back up to 94 on the Aug contract before the month is over. Feeder cattle remains strong. We see a bull flag developing on the daily charts so look for more upside in the near term. Hogs held onto the bounce and are also forming a bull flag. We see hogs pushing towards 78 later this month. Pork bellies have stalled and consolidated the sell off. WE fell that the low is in and it is time to look at long call spreads buying the 90 and selling the 95 on the August contract.

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.