It was a big turnaround for the energy markets especially in crude and the products as GDP numbers came in a bit better than expected in Q2 at 1.6% to help thrust energies higher. Crude oil is a very odd bird right now with all the structured trades pointing towards a sell off but it has surpassed $75. The WTI spreads have come off significantly trading at -105 and -110 in Oct/Nov and Nov/Dec respectively. The arbs have gotten hacked too with the Oct arb trading -150. Still this market is strong enough to bounce off the $70.50 support level. This week should be interesting with the non farm payrolls coming out. I think rallies need to be sold into.

Natural Gas had a tough time last week as this market got pummeled below $4 on the NYMEX. Inventories are very weak and this is the time of year when natural starts to sell off so look for this market to try and consolidate around the $3.60 level before heading any higher.

The key word is caution this week folks. The market is down because of a lack of confidence. The market is hoping that manufacturing picks up while consumers head for the bunker. The S&P may need to stay above 1066.00 in order to show it can take a few hits from the bear claw. The monthly job report will be announced Friday. It will be a holiday weekend and many will be on vacation or leave early for a half day. This does not mean the market will not swing in one direction or another. So, be ready on Friday!

This morning economic data was announced showing an increase in consumer spending which rose 0.4% in July after 3 months of bad announcements. This could be back to school spending accounting for this rise. Now, if Aug. and Sept. numbers show a rise this will get Wall Street’s attention. This trader is unsure because the consumer is struggling and these numbers may be inflated for a short period. Durable goods rose 1% in which half was auto sales. Doesn’t this sound like parents buying vehicles for their children going to college? (1)

The economy may not be growing fast enough to support job growth which can lead to economic disaster if action is not taken. Job creation and stability of the consumer is needed to get this country back on track. The people built this nation and the government needs to let them build it again!

Precious metals faded toward the end of the week as GDP reports were better than expected giving this market reason for investors to sell and take profits. Gold could not get above $1,245 and silver could not breakthrough $19.25. This week is expected to be choppy with the non-farm payrolls playing a huge factor into the trade. I do think the market will see gold cool off to $1,225 before going above $1,245. This market needs a breather after it crawled up from $1,159 to $1,245 so a bit of profit taking is not out of the question.

Copper had a huge rally on the Sunday night session as December broke above $3.40 to trade at $3.46. Bernanke’s comments last week fueled investors into this market. I saw a lot of selling on the rally however and I would recommend doing the same as I can see copper going back down to $3.35 before heading higher ahead of the non-farm payroll action Friday.

Potentially, there are two major bullish technical patterns forming among the soft group. A cup and handle on the long term sugar chart, (subscribers have seen this mentioned recently in my daily comments), which could project a bull move to 26.50. And an inverted head and shoulders on the long, long, very long-term coffee chart that shoots coffee up to like $4.00. Who knows? Will these chart patterns complete their development and mature? I do favor both markets from the long side, but inevitably timing is the key, as seen in both of those very markets this past week.

Anyway, I expect coffee to try to confirm it is back on the track to head north by seeing it close over 180. There is some notable suspicion among a few skeptical savvy traders that coffee may again fail, and it may, but until it does who really wants to sell it aggressively? Just consider if coffee makes a new high? Will sellers appear in volume and be willing to offset the large number of new longs and short covering that ought to occur? I doubt it. Look to buy call spreads in Dec on dips. Look for resistance at 182 and 186. Support 172.50 and 165. A drop below 162, brings 155 into play and below there watch for funds to bail.

As for sugar, as pointed out in my daily comments, it seems the past week that if you bought sugar when it looked ugly, and sold it when it looked good, you did very well. However, while you should go with what works, consistent profit by such means is likely just an anomaly and not a preferred method of approach to successful trading. Look for sugar to make a move upward this week. Any break of support at 19 cents is reason to dump longs.

Cotton made new highs again before dropping late Friday. Shorts are all losing money above Friday's highs and short covering will tend to support dips. The roll keeps coming earlier and earlier. With March trading discount the spread will consume much attention over coming weeks. Exports are terrific and flooding in Pakistan a growing concern. The US crop is the source of last resort and while the crop is bigger than last season, it still isn't huge. Any late problems with the crop could really bring a shot on the bull side. Already the market is hearing cooler temps in West Texas? 90 cents seems likely and a dollar possible, unless funds decide they no longer favor the long side of cotton, but even if they do, massive shorts will cover. So support seems close. I believe that buying dips and kicking out half on new highs, then re-buying dips seems the best approach.

I have been a bear toward cocoa but still have no position since my focus has been on other softs. It will be interesting to see how cocoa does now that support at 2750 will act as resistance. Prices look headed lower, but can and will they do so with vigor?

Good Morning; On Friday the market saw a solid rally with wheat leading the way with talk of reductions in the German crop as late rains damage the already stressed crop. Corn eclipsed the fabled $4.39 level only to find a lack of excitement above, allowing for the trade to be pressured by profit-taking. It was pulled below this level to leave the week with September options pegging the $4.20 strike. Beans rallied and closed above the 20-day MA adding technical momentum to the trade. Meal rallied but was outgained by bean oil following a test of the 200-day MA which brought in major buying. The Sunday overnight session saw all but bean oil open on lows then proceed to rally across the board with wheat gaining the most yet again. The overnight news was relatively quiet but growing concern over Argentine, Australian and German weather was enough to spark fresh buying heading into month-end tomorrow. The day session looks to open in line with the overnights with no momentum gained from macro influences so far.

Beans are called 5-7 higher looking at the range high at $10.49 this week with indicators supporting a bullish move. Corn is called 5-7 higher regaining $4.39 looking at the Dec high at $4.59 as the next bullish target with indicators in the upper end of the range. Wheat is called 10-15 higher continuing its bounce off the 50% retracement at 676 with the 62% back level at 721, the next bullish target. Soy Meal is called 3.00 higher to start with the range high at 304.50 the next bullish target. Bean Oil is called flat/mixed to start, floundering after Friday’s explosion with indicators supportive of a continued bull move.

Looking at the rest of the week I see month end on Tuesday with wheat the obvious focal point. There are plenty of questions concerning allocation levels and the possible sales of wheat-entrenched longs due to current prices bringing the percentage of capital in wheat to above advertised levels. This is a factor but the weather scenarios worldwide should counter any selling seen due to reallocations.

Domestic weather is bearish to neutral with continued above average rains in the southern Canadian prairies and far northern states worrisome. The biggest concern has to be spring wheat especially if coupled with the degradation of the German crop late in the season due to heavy rains. This is no real threat to yield, just quality and now quality is becoming a concern. Other than that, the US maturation period is running along smoothly with no real delays in southern harvest. Heavy rains in the Manchurian region of China are causing floods. Russian rains in the northern regions again over the weekend missing the far south with this pattern continuing through this week. Weather in a nut shell is not great but could be worse. Rains in Germany need to stop, rains in S. Russia need to start falling, rains in Argentina and Australia need to spread out and rains in the Canadian prairies need to stop.

In conclusion, the week ahead will be dominated by yield results for corn and early beans out of the south. Weather in Europe, Asia, South America and Australia all need to be watched. Currency issues between Europe and the US need to be watched coupled to crude oil prices. World inflation talk led by food needs to be watched and finally month end allocations on Tuesday and Weds need to be watched. There is a lot on our plates right now with the agricultural markets stuck between burgeoning bullish fundamentals and a shaky world economy.