ENERGIES
December Crude Oil has traded sharply higher over the past week as more money is flowing into commodities. Traders are treating this market as a hedge against uncertainty in the U.S. financial markets. Continue to look for higher markets.

METALS
December Gold and December Silver are also experiencing an increase in cash flows as traders seek safety from the unstable financial markets. Look for volatile swings to continue as traders sort out whether the U.S. banking rescue plan can work. This uncertainty can be bullish for the metals but also cause volatility. Look to enter on dips.

GRAINS
All major grain contracts were bullish on Monday as fund money has flowed back into commodities. Fresh money and aggressive buying by the funds helped support November Soybeans and December Corn. It looks like buyers have returned following a few days of low interest. Fundamentally these markets should be strong as inventories are low. A further decline in the Dollar should lead to more export business. This will further lower inventory which should lead to higher markets.

SOFTS
The softs complex rallied on Monday as money from hedge funds helped drive up demand for contracts. The uncertainty in the stock market and the low prices in the commodity markets should continue to encourage buying in the softs complex. These rallies are being caused by new money inflows rather than changes in supply and demand of the actual products. Basically the money has nowhere to go because of the problems in money and stock markets. Once the situation in the financial markets is resolved, look for profit-taking to hit the softs. As long as there is new fund buying, stay with the long side, but be quick to exit if the stock market stabilizes as most long traders will take profits after yesterday’s gains.

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