Financials
Stocks: The Dow managed to breach 12,000 this week but as I mentioned last week, it did so on decreasing volume. This is never a good sign for any market especially the market as a whole. I am both selling calls and buying puts to position for the correction that is all but sure to come. My first downside target is a move back toward 11,800 on the Dow. Next weeks FOMC meeting will set the tone for the coming weeks. I am not expecting the Fed. to make any changes to the current pause in rate hikes. Look for the market to begin a sell off after the meeting.

Bonds: Bonds spent the week drifting as we expected. The overall bias remains down and after Tuesdayââ,¬â"¢s FOMC meeting we should see support at 110 taken out. After that we have minor support around the 109-12 range and strong support near 108. Again anyone who believes the Fed is going to lower rates soon really has their head in the sand. Simply look at the CRB index and you can clearly see that inflation is still a very real threat.

Energy
Energy continues to consolidate in the 57-62 range that I have mentioned here in weeks past. I see this market continuing to consolidate within this range until OPEC decides to really cut production not just quotaââ,¬â"¢s. Natural gas rallied to 7.00 and is now a sell. I am expecting natural gas to fall back to 6.00 this week.

Metals
Metals did in fact reach the targets I mentioned last week but ended the week with a whimper instead of a bang so I remain a cautious bull. For metals to really break out and rally we need to see the Dollar index fall below 85.00. Once that support level is taken out metals should get a strong bid in them. I continue to favor silver over gold in the near term.

Grains
Grains are showing signs of exhaustion, wheat in particular looks really ripe for a correction. We did in fact enter the corn wheat spread that I mentioned last week and so far we are up about 100% on the margin! We are very aggressively looking a calendar spreads in all the grains at this time so look for those types of trade reccomendations from us in the coming week. Oats are always the leading indicator for grians and they are well off their recent highs so look for the rest of the complex to follow suit this coming week. The only bright spot I see in grains in the near term is the soy complex. I remain a bull of beans and feel a move to at least 625 should be in the cards this week.

Softs
OJ failed to follow through from last weekââ,¬â"¢s huge rally. This market is also showing signs of exhaustion so donââ,¬â"¢t be surprised if we retrace to fill the gap in the near future. Cocoa continues to get more and more of my interest and we are close to putting out a bullish trade on this market as well. Coffee continues to struggle but it wonââ,¬â"¢t be long before we see this market get some legs. We continue to target a move above 110 in the near term. Sugar is consolidating and will likely continue to do so until crude oil begins itââ,¬â"¢s next directional move so for now I would sit tight in this market. What can anyone say about cotton except yawn.

Meats
Both Oct live and feeder cattle have roughly one week to expiration and it seems like the market has been waiting for the Cattle on Feed report to pick its direction. Monday we will get the first glance of the markets reaction. Barring any significant developments in the corn market, both feeder and live cattle appear to be near term oversold and I would look to buy strength for a quick bounce, though there is no telling what role the grains may play in the long term. Dec lean hogs appear to have found some support near 58.50-59 and If that can hold I would be willing to take a stab at a long trade targeting 62 in the near term. Otherwise 56-57 on the downside should act as short term support.

Forex Currency

EUR/USD
The 1.25 support level I mentioned in last weekââ,¬â"¢s newsletter held strong on U.S data, and the resulting rally had this pair testing resistance near 1.2640 by weeks end. I do not expect any significant movement until Tuesday 2pm(est) when the Fed releases their decision. If the market responds favorably I would look for a move towards resistance near 1.2680 followed by 1.2740 and possibly 1.2770 if it really gets going. If the fed does increase their target rate all bets are off and I would look for a short entry below 1.2585

GBP/USD
What a week for the cable, solid rallies to start and finish the week with a perfect consolidation on Wednesday. However, this pair did lose some steam after such a large move, and there was some added pressure as the resistance near 1.8875-1.89 came into play. Just as with the Euro, I expect this pair to be quite on Monday, perhaps even pulling back a bit. However, once the data comes out look for 1.89 & 189.60 to be key levels of resistance. To the downside 1.8690 and 1.855 are still relevant support levels.

USD/JPY
After this pair stalled near 119.75 we saw it pullback and bounce off of the strong 118 technical & psychological support level. The continued strength that I was looking for failed to materialize this week. Perhaps it was because early in the week the Bank of Japan mentioned that they were likely to raise rates due to record numbers in the export sector. With several key data releases next week I would look for increased volatility as the market tries to digest the numbers. I am looking to short this pair below 117.85 with a stop above 118.30. There has also been talk that Russia has been accumulating the Yen for their reserves so that may increase the downward pressure on this pair near term.

USD/CHF
USD/CHF: This pair continues to trade between the levels at which I feel comfortable going either long or short. However, it looks like the support @ 1.2550 & resistance @ 1.2725 has come into play in the very short term. At this point I would consider going long below 1.2530 with a stop below 1.2490.

AUD/USD
After pushing through the resistance @ .7500 the Aussie has continued to rally and is now approaching some significant resistance near .7600. There is no doubt that the hawkish comments from Down Under added to the buying pressure, but a market can go only so far on rumors before stalling. I believe this pair will be focused solely on Tuesdayââ,¬â"¢s meeting as there is no real info on tap from down under. If you are long with us on this one be sure to tighten your stops as a pullback to .7525 is not out of the question before trying to push through .7600.

USD/CAD
The resistance @ 114 held and kept the lid on the recent rally. I continue to like the longer term prospects for this pair and am looking to go long near 1.1240 as I was quickly stopped out of the long entry I suggested last week. Strong support remains near 112 and resistance @ 114. On Thursday some members of the Bank of Canada are speaking and the markets might cue off their remarks, just keep that in mind.

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.