Weekly Market Report by Odom & Frey Futures & Forex

The CRB index hit another record. Grain prices exploded to the upside on the back of Friday’s Crop progress and Supply Demand reports. We mentioned last week that the current up trend in commodities is reaching unsuitable levels. This continues to be true so be careful with any new long entries at current levels. Overall look for the bull to lose its breath and begin to stumble. The bull is NOT dead just in need of some seasonal hibernation.

General Market Comments:

 

CRB Index at all time high.
The CRB index hit another record. Grain prices exploded to the upside on the back of Friday’s Crop progress and Supply Demand reports. We mentioned last week that the current up trend in commodities is reaching unsuitable levels. This continues to be true so be careful with any new long entries at current levels. Overall look for the bull to lose its breath and begin to stumble. The bull is NOT dead just in need of some seasonal hibernation.

 

Energy Complex (NYMEX)

 

Crude Oil:
Crude oil has now put in a solid double bottom and we now expect to see a strong rally to come. Last week we suggested long entries but put on below $90. This week we are targeting a move to test resistance at $95. We then expect to test the old highs at $100. Stops should now be working at breakeven levels. Last week we heard rumors that OPEC was considering cutting production at its next meeting. If they follow through with that then look for Crude Oil to trade at new all time highs over $100. Also Chavez threatening to cut off crude supplies to the US should keep the bid in the energy sector this week.

 

Natural gas:
Natural gas has hit our target from last week at 8.25 and we have now exited our longs. We see significant resistance above 8.75. If that holds we will look to short after a test of resistance.

 

Equities

 

SP500, DJIA, NASDAQ:
This week we are looking to retest the lows near 1310 on the S&P. If those levels fail to hold we would then target a move below 1300. Either way we do see the Soc. Gen. lows from the 22nd of January to hold. Buy calls on any major dips towards those levels.

 

Financials

 

U.S Bonds:
Last week we mentioned selling rallies above 120 and covering them on breaks below 118. You should now be out with roughly $2,000 profit per contract. This week we see more of the same except now we are buying 118 long looking to exit over 120. Bottom line is more range action this week.

 

Metals

 

Gold, Silver, Copper:
Gold is above $900 again but so far has been unable to break out above the recent highs. We do not expect this market to make it through those levels in the near tem and are therefore sellers of rallies over 920 with stops at or above 955. Our target is a move to at least 875 and most likely 850. Silver is also a short above $17.00 with stops above 17.55. Target a move back below 1600. Copper broke out to the upside but with all the concern about more of a slowdown to come in housing we do not expect to see this market follow through. At best we expect to see 375 tested.

 

Grain Complex

 

Corn, Soybeans, Wheat:
Grains got their final push on the back of Friday’s grain reports. We expected this report to be the typical buy the rumor sell the fact type of event and so far it looks to be shaping up that way. We expect to see all the grains turn lower this week. Wheat should lead the complex lower with corn not far behind. Do not confuse the fundamentals, this market is technically very overbought and that will in the near term override the overall bullish fundamental tone. Buy Soy meal, Wheat and Corn puts on rallies this week.

 

Softs (NYBOT)

 

O.J, Cocoa, Coffee, Sugar, & Cotton:
OJ fell below support at 1.30. We are buying this dip with stops below 1.25. Targeting a move back up to 1.40. Cocoa did manage to push higher but we still see it resisting out and pulling back below 2300. Coffee pushed through resistance at 145 but we still see it pulling back this week. We would be long buyers again at or near 140. Sugar is still trying to push higher. We still do not see this market breaking out over 13 cents. Buy puts and hold for the next 30 days. Cotton broke down on Friday and is now going to fish for support this week. We expect 66 to hold as support.

Derek Frey, O & F’s co-founder and head trader, is one of the leading experts in the Futures & FX markets. He is regularly quoted by The Wall Street Journal, Bloomberg, The National Post, and Reuters. Mr. Frey has also published articles for Option Trader Magazine and Pit News. His market comments are sought after by traders around the world and he can be heard on etvfutures every week.