Energies
Another test of $60 after a break of support and the bears are getting exhausted in the energies right about now.  Unfortunately, I am one of them, but if I have learned anything in my years of trading it is patience.  The decline in volatility this week suggests a turning point next week and the market is fundamentally ready to falter.  There are some worries over a buy the fact affect on the energy bill, and some concerns over reports of declining demand year over year.  Overall the market is consolidating ahead of a big move and as a bear I need to stand behind my view and build a position of puts and short calls.  Natural gas also looks ready to falter.

Financials
Stocks failed heading into seasonally bearish August, but not before establishing some key resistance below 1250.  Look for a strong selloff next week if the market is in fact topping.  If we hang around plus 1230 prices on the S&P for much longer the momentum will push the market to new highs.  Bonds fell apart on solid economic reports.  This market is in self-destruct mode, especially when you throw in the fear of a failure in Asian demand for US treasuries.  Look for a break to fresh lows and a collapse to sub-112 prices in the next few weeks (if not sooner).  The dollar remains in position to channel for the rest of the year, and I continue to support my forecast for a range between 87-92 through December.  The yen is separating itself from the pack, offering a potential failure in that market while European currencies offer support. 

Grains
Weakness in grains offered intermediate term bulls like myself a decent entry on Friday.  I suspect we will see a choppy and volatile market over the coming weeks, but ultimately breakout to the upside.  I recommend selling corn calls against any long futures, as the upside between now and September option expiration would be limited.  Moreover, bean volatility should spike and offer strangles and just straight long call players a bounce in underlying volatility.  I remain a rice bull.

Meats
Cattle has all the bearish fundamentals and a heck of a contradiction in the technical outlook.  This long time bear is perplexed by the chart, but I have no choice but to buy puts in the midst of this bogus rally.  Hogs and bellies remain bullish with a perfect Mound Ladle Formationâ"¢ suggesting a break to fresh highs in August hogs this week.

Metals
Further strength in gold and copper was supported by a flat dollar and the after affects of the Chinese Yuan news.  Overall the market is in a sideways mode with building consolidation ahead of a major failure in the coming months.  Silver is piggy backing, but the options are so cheap I say long strangles for any month would pay off.  The platinum move on Friday demands to be shorted and I remain a buyer of palladium on dips.  Copper is in a breakout, but has the same look it had before a couple of double digit one day failures over the past year - so bulls better protect and long puts is my best recommendation. 

Softs
Coffee intraday swings are getting ridiculous, and the support around 97 is becoming a setup for impending failure.  Long term bull is still on target, but short term new lows is likely in this market.  Cocoa is irritating, as I wanted get on the bull bandwagon ahead of the elections in the Ivory Coast, but the market never gave me a real bottom to do it.  I remain cautiously bullish and would jump at 1300-1350 for an entry.  Cotton remains a sell.  Lumber too (as we set fresh lows).  Sugar is having a hard time getting to double digits and my gut says that CAFTA is a good offset to the energy bill ethanol news - sell.  OJ remains avoidable.

James Mound, owner of JMTG Brokerage LLC, MoundReport.com and author of the book 7 Secrets, writes the Weekend Commodities Review Newsletter. Receive your free weekly subscription to the Weekend Review by e-mail. Click here.