David Fuller's view I maintain that markets are still discounting somewhat slower GDP growth, mainly as a consequence of the recent, moderate spike in crude oil prices. Along with the overall strength of commodities, this has led to further interest rate hikes by central banks in many of the growth economies where inflation is clearly a problem. There will also be some apprehension among investors regarding the expiration of QE2 at the end of June.

Slower growth and some monetary tightening could lead to a further unwinding of speculative long positions in commodities, particularly if most stock markets remain in a choppy reactive phase over the next few months, as I suspect. Consequently, I remain more interested in shorting various commodities over the next few weeks, even though the long-term secular bull market driven by growth economies will resume, possibly before yearend.

Countertrend trades need to be well timed so I would prefer to short commodities following small rallies within short to medium-term downtrends. I will not be shorting grains and beans, at least not in the near term, because their fundamentals remain alarmingly bullish, in my opinion, mainly due to adverse weather conditions and shortages.

However, should the grain and bean complex soar again from current levels, this would be bad for just about everything else so I personally will continue to stand aside. A note of caution for subscribers who understandably wish to participate because of the weather-related bullish fundamentals and unfulfilled upside potential suggested by the overall chart patterns: if grains and beans soar again, exchanges will be under pressure to curb speculative activity, as we saw with silver last month. You may have also seen Evelyn Browning Garriss' forecast of better growing conditions over the next few months.

In the event of technical rallies anytime soon, I would prefer to short gasoline or crude oil and the livestock contracts.

Precious metals are experiencing technical rallies but I am not participating due to my imminent holiday and because I doubt that the rebounds will last. I continue to look for medium-term lows in precious metals in July or August, although they are likely to be of the quietly ranging variety rather than dramatic, easy to identify troughs. Seasonally, and if the longer-term uptrends remains consistent, the next clear evidence of medium-term upward scope for gold and its sister metals should appear in September. If so, I will certainly wish to participate.

With stock markets still in a corrective phase, as also mentioned above, I would like to reopen a few hedge short positions in futures. This has been a tricky exercise in recent months because of the choppy market action. Nevertheless, rallies within the current ranges will tempt me as temporary short-selling opportunities. I would certainly not consider hedging my entire long-term equity portfolio because I am only looking for corrections, mostly within the cyclical bull trends which interest me. However, I would like to have some hedge cover in widely traded US and European stock market futures during the next few months.

In terms of buying opportunities in stock markets later this year, the best prior environment would be: 1) A moderate correction which would facilitate mean reversion towards 200-day MAs by all technically overstretched indices, enhancing valuations in the process; 2) A simultaneous pullback in commodities, not least crude oil, and hopefully lower grain and bean prices due to better crop conditions during the Northern Hemisphere's summer months; 3) A steadier USD to curb commodity speculation; 4) Less upward pressure on short-term interest rates in the event of lower commodity prices.

If this sounds like a wish list, that is because it is, although not beyond the bounds of possibility. Conversely, my main concern is the risk of another spike in crude oil prices. However this would almost certainly require another significant supply disruption. I currently estimate that possibility at no more than 30 percent, at least for this year. Meanwhile the charts will show us, and you and I can only deal with the reality that markets provide.