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Spring is here, farmers are hitting the fields, the Cubs are hitting the ball, and after a miserable fall and a cold, dark winter, the markets and the economy are showing some signs of improvement, so let's take a look around and see what we may have to work on.

The S&P 500/Dow and NASDAQ: The S&P 500 yesterday finally cleared the 900 and level and is now showing black ink for the year. We have now rallied a whopping 35 percent from the March 6th lows. Likewise the NASDAQ as rallied 34 percent from its lows, and the Dow is up nearly 30 percent.

Where do we go next? Markets will overshoot proper valuation both on the downside and on the upside, and clearly the March lows were an overshoot, as much as the fall plunge was probably more intense than circumstances warranted. Monthly studies give me the impression that the market has further upside room to work. I think we can take the Dow towards 10,000 by year's end. The corresponding area on the S&P is somewhere around the 1100 area. I think the current rally probably has about 8-10% more in it near term, after which we should see some sort of relatively mild pullback, followed by another leg higher.

Bonds/Notes/Eurodollars: Price is supposed to be a function of supply and demand, and there is little doubt that there is going to be plenty of supply given the current government spending paradigm. That should lead to bear market, right? Under normal circumstances the answer is yes, but with the Fed in the market and buying up treasuries this can keep the market supported for a very long time. So, on the long end of the curve, for now I am looking for more of trading range developing. Strength in the stock market will weigh on the bonds, just as a correction will tend to lend strength. Look for the lows here around 115 1/2 and the upper end around 128.

The 10-year market will likely feature similar activity with the 119 area being the low end and 124 the high end. It is unlikely that the Fed is going to change their rate policy any time soon, so I see little action in the nearby Eurodollar market.

The currency markets remain rather choppy and difficult. The supply of dollars is ample due to the various government programs, and this should work as a weight on the dollar. The key word here is should, if other central banks continue to add liquidity, we could see relative stability in the dollar. The Swiss franc could prove to be the odd man out here, and actually find solid footing. I am looking for continued choppy action across the board here in the other currencies.

Metals, precious and otherwise: Gold entered a bear phase after making highs in February; however that phase could be in the process of ending. The 860 to 865 area remains well supported. Seeing a range from 880 to 960 developing of the next few months seems likely. Does gold have the potential for a big rally taking it well beyond the $1000 area? Yes it does, however we are going to need to see real inflation set in, by this I mean we are going to need to see notable drop in unemployment, a meaningful bottom in housing prices in the hardest hit areas, along with some real estate appreciation. We are also going to need to see a general rise in the CRB. While I think this scenario is in the cards, it could be a good while before we actually see that. Silver looks to be under priced compared to gold and I can see some further upside here.

Copper has been a star performer so far in 2009, posting around a 50 percent gain from the late 2008 lows. Copper is the metal of life, and seeing the big rally should give us a warm fuzzy feeling about the economy in the most broad sense. We should however temper that warm fuzzy feeling with the knowledge that the funds started the year with a huge short position that they have been slowly squaring up. I do not think the yearly highs are in for the red metal, but we should be prepared for range like up and down trading.

Coffee, Sugar and Cocoa: I like coffee, and I drink several cups everyday. We do have a story developing here with the 4-year production cycle and production issues developing in several places. Coffee is developing a friendly technical pattern over the past several weeks. The real question here is one of traction. Under "normal" circumstances we would probably be in a screaming bull market by now, but the difficult macro circumstances have kept a lid on things...for now. I think eventually reality will set in and we could see some big upside here. Make sure to follow my STI for updates on this and the other markets.

Cocoa, while trading better today has not faired as well this year, in part to better than anticipated supplies and some weakening in demand. I am of the opinion that demand will improve in the second half of the year, which will lend some mild support here but all in all I am looking for wide range for the remainder of the year.

Sugar finally broke out of its funk on Friday, and here too the question of traction is really key. There is enough bullish news to be supportive, but not enough to be wildly supportive. If other outside markets can remain supportive, or at least not be too much of a drag we can see prices climb.

Orange Juice has managed a fairly healthy rally since March, has there is some slight evidence that the demand picture, which has been in decline for several years has shown some signs of stabilization. Supply concerns have eased over several months here as well. Whether or not prices at these levels can be justified remains a big question, and given the nature of this market, moves can be severe both up and down.

The livestock complex has had its own particular problem, and that is swine flu. I am not a doctor, nor do I play one on TV, but to the best of my knowledge you cannot get swine flu from eating bacon, pork chops or ham. Hog prices have taken a beating since the flu story broke, and this just shows how reactionary markets can be. When the dust clears and this story abates hogs could be a bargain. Cattle prices have been stable through all of this and I think we have bullish story coming here, but we are not quite there yet. Feeders have managed a bit of a fit and start sort of rally, and much like the coffee, at some point here we are going to see some traction set in.

Grains: Beans, beans, beans, we have a supply story here as balance sheets remains tight and there are ongoing concerns about the number of acres that will be planted, and then there is, as always the weather question. It is my thinking if we are going to see a bullish grain market the soy complex will be the leader.

Corn has been moving fits and starts, but seems to be having trouble getting any traction, with a weaker ethanol picture, corn could continue waffle about for a while, however if bean prices firm, energy prices pick up or the dollar weakens, or any combination of these factors we can get corn moving higher.

Wheat has formed a range between 5.00 and 6.00, and I am not looking for anything to really change that unless we can get the other two to start moving, and in that case we could see wheat play a game of follow the leader.

Energy: Crude oil is back holding well above $50.00 a barrel, sitting at about 1/3 of the price from the record highs of last year. I don't think OPEC can keep their prices cuts in place, and the still fragile economy is keeping demand weak. We had no more business at $147, than I do piloting the Starship Enterprise. I am looking for at best a near term high a round $60 and range bound trade between $40 and $60.

Natural Gas: This market has been a total dog for the last year, slumping to about 1/3 of its June 2008 highs. We have seen cuts in domestic production and the price just keeps sagging. I am looking for a more sideways trade in the coming weeks, and I do have caveat for those well fed bears in here: a supply issue has the potential to spark a fierce rally in here, or fat that matter even the threat of a supply interruption could get things going, and hurricane season is just around the corner.

Market conditions have improved vastly and we should see some good trading in the months ahead. My name is Sterling Smith and I am still bullish on the future.

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NEW! Complimentary Weekly Report

Introducing the Strategic Trade Index (STI), a new and innovative report from Industry veteran Sterling J. Smith. This dynamic trading tool is easy-to-use, and was developed with the commitment to provide up-to-date market information to all types of traders. See for yourself the power of this tool, sign up for this COMPLIMENTARY weekly report today!