This past week we have seen some signs that certain markets are ready to get wild again. Friday’s Crude oil market is the first most obvious example. Metals also saw some strong moves with gold breaking out above its recent consolidation. Look for energy to retrace early next week and look for metals to continue to push higher. The grain markets are unable to get things moving in any direction but look for those markets to begin to move next week as well. The stock market continues to be under pressure but until we see the Dow trade below 12,400 the bears will not get excited.
Stocks: The Dow as I mentioned did fall under some pressure this past week but is still in its trading range and is not yet a bear. Most of the dips we have seen have proven to be buying opportunities so approach both the bull and bear side with caution.
Bonds: Bonds have been rallying for the past few weeks but after failing to be able to follow through above 111 they turned and broke down. Look for bonds to fall back below 110 this week.
Crude oil had a very strong push in the latter half of the week until about the last 30 minutes of trading on Friday. The fact that crude could not close above $60 after spending most of the day there is quite bearish and I would look for follow through selling to continue in the early half of the coming week. Natural gas has struggled with 8.00 but could still break out above that point if we see more cold weather. Over all I will be a seller more than a buyer of energy this week.
Gold ended the week quite strong and looks poised to make another run at $700 in the near future. Silver still has resistance at 14.25 but look for that to get pushed through this week. Copper continues to struggle around the 250 range and for now I see little that will move copper out of that area in the near term. Over precious metals should remain strong while the industrial metals continue to drift.
Grains also seem to be trying to break out after a long consolidation. I have been waiting for this follow through for some time now and this should be the beginning of much higher grain prices. I continue to favor Beans over the rest of the complex. My second favorite is wheat. Buy wheat with stops below the double bottom.
OJ has been building a classic bear flag and that should point the way to filling the gaps all the way down to 165 over the longer haul. Cocoa is on fire and could rally back into the 2000 range if we can break out above 1785 in the near term. I am expecting this market to follow through quite a bit so get long if you are not already. Coffee continues to slide lower and for now I am out of this market and waiting for a turn back to the upside. Sugar is trying to turn back up and I am buying long with stops below 10.00 in the near term. Cotton too continues to slide lower and until we test support at 51.00 I will stand aside.
Cattle has seen a wild week and I am looking for that to continue in the week ahead. Near term I am bearish and looking to short with stops above this past weeks highs. Bellies and hogs on the other hand continue to push higher and this is one trend I will not fight. I am expecting bellies to rally back above 105 this week.
Odom & Frey
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