Since the avarage S&P 500 was doing very badly (minus o. People turned their attention the commodity market.
Reuters CRB Futures Price Index: 23.68%.
Energy Sector: 118.57%.
Precious Metal: 33.63%.
"Softs" (e.g include sugar): 78.01 %
In US, Commodity market is regulated by Commodity Futures Trading Commission (CFTC) since 1974.
The commodity market is well over 150 years. Actually, that is not true. Commodity market always exited and always will exits.
Hedgers (real companies with real commodities that they need to trade) and large speculators require to fill out a report to CFTC on their positions. They compromise 70-90% of the entire market each day.
Companies make future contracts to ensure their profits ni a volatile market. By making a contract for the next X months, they ensure that price level for themselves.
Since you have visibility on the large traders (mostly hedgers as defined above), you can emulate what they are doing with your trades.
Commodity prices tend to form clear price channels. Allowing a strategy to sell on the top and buy on the buttom. This is caused by the companies purpose to obtain on "optimal or good price" with their hedging activity. Thus price moves 80% of the time sideways. It only moves up or down when there are fundamental changes in supply or demand.
The Role os Speculators
In this process, speculators give liquidity to that market, and they provide the money for the companies for their entire activity. Basically, speculators are the ones who are financing the companies.
Unfortunatly, poor speculators are also the guys we get swallewed up easily by the giant gorrilas (the companies) when those companies make a move. Speculator can easily loose the money they provided to the giants. And the giants will not loose the money as it is only hedging for them.