Weekly Outlook for Commodities from Odom & Frey

Futures News & ViewsBy: Derek Frey

January 20, 2009

General Market Comments:

Obama!

This week we have the Inauguration of President Obama. Once the party dies down the real task at hand begins. We expect to see many things coming out of the Oval Office in the coming days and much of that will provide the framework in which markets will operate in the coming years. As the US moves more and more towards Socialism many more industries will be nationalized just like banks already have been. We expect that both heath care and energy will be Nationalized before the over situation begins to turn back up. I am not commenting on whether this is right or wrong, I am simply acknowledging what is being openly discussed in Washington. My point is simple. Nationalization of any industry will require Trillions of new Dollars being created, and this continued creation of currency will serve to devalue the Dollar.

Energy Complex (NYMEX)

Crude Oil:

I have talked about Crude oil putting in and holding its bottom near the $35 a barrel level. We have seen that level tested again and it held again. We continue to expect Oil to hold these lows and begin to rally back above $55 before spring is over. We are therefore buying dips as they come.

Equities

SP500, DJIA, NASDAQ:

Stocks are shaky going into the week but after the euphoria of Obama taking office is over the real job begins and the market will have to come to grips with the continued Nationalization of industries. That being said we are buyers of any dips in the S&P near the 800 level. We expect the lows near 750 will hold in the near term.

Financials

U.S. Bonds:

Bonds attempted to retest the highs but failed as expected to break through. We are now looking at buying ATM puts on rallies.

Metals

Gold, Silver, Copper:

Last week we advised readers that we were buying Gold and Silver as it was pulling back, now you know why we were doing that! We continue to buy Gold on dips and Silver for that matter as the continued creation of Dollars will devalue the currency and gold will be one of the main beneficiaries of that decline in the Dollar.

Grain Complex

Corn, Soybeans, Wheat:

We continue to buy into any major dips in grains so long as the yearly lows hold. We still favor beans over other grains but expect the complex as a whole to move higher slowly throughout the season.

Softs (NYBOT)

OJ, Cocoa, Coffee, Sugar, & Cotton:

Softs remain the laggard of the complex but for how much longer? We suspect not much longer. We are looking in particular at cotton and sugar as the best long prospects near term. Coffee and Cocoa are a close second. Bottom line remains buying into dips as they come.

Questions or Comments?
Call us toll free: 866.636.6378 or
Email the author directly: [email protected]