Energies

Oil prices continued higher last week, tracking alongside a rising stock market. This week should offer a critical turning point and a bear put spread is recommended. Natural gas remains a contrarian buy flat out with calls or as a spread against short crude.

Financials

Stocks accelerated gains last week after what was already a historic short-term rally. This market is on its last rally legs and buying puts should be considered the trade of the year here. Bonds remain range-bound ahead of an upcoming Fed meeting, but expect some upside in bonds as the stock market reverses. The dollar took it on the chin the last few weeks, failing after a critical breakout. A resumption of the bull breakout is expected and this selloff should be bought into. The euro, pound, Canadian and Aussie dollars are all strong sells. The yen is reeling back after a surprising third recent intervention by the BoJ, which is apparently acting independently this time around. It is important to note that this intervention has something the previous two did not – an off-balance market ill-prepared for the timing of this intervention. The long spec positions in the yen were likely heavily increased on the recent breakout, and I believe a lot of shorts covered making a long liquidation on this intervention a strong reality over the next few days. Nevertheless the long term picture remains very bullish for the yen.

Grains

Expect beans to penetrate near-term consolidation support to the downside early this week, and grains as a whole could be in for a massive November selloff. Prepare with bear put spreads and a possible long wheat/short corn spread. Rice remains a sell with straight puts.

Meats

Cattle has turned to bearish nicely in the short term and should see a solid 5-7% decline this month ahead. Hogs are also a sell with straight puts or short futures with stops above 89 on December.

Metals

Metals rallied last week as commodity prices rose and the dollar took a bath. This should be quickly reversed this week and it is critical for the bears to see an immediate destruction of last week’s rally to increase the odds of a near-term bear collapse.

Softs

Coffee prices surged on weather concerns in Central America affecting crops, but this appears to be an excellent chance to get short with straight puts and/or bear put spreads. Cocoa’s bounce should be sold with resistance expected at current levels. Cotton remains range bound and is avoidable. Sugar remains in a downtrend off the highs, while OJ reversed and is testing critical highs. It appears OJ is developing a wide congestion pattern near the highs but is unlikely to establish prices over 210, making OJ a sell with straight puts.

James Mound is the head analyst for www.MoundReport.com, and author of the commodity book 7 Secrets. For a free email subscription to James Mound's Weekend Commodities Review and Trade of the Month, click here.