As you can see from the chart below this week took some of the fizz out of some of the star performaers in commodities markets.
Energy based commodities which to date had been among the hardest hit with talk being that the heavy involvement of speculators being to blame. The theory goes that the more specualtors there are within a market the more unstable and unsustainable it becomes. Such markets are ripe for quick and savage pullbacks, part of the evidence for this argument with regard to energy issues is this chart.
This looks at the price of crude overlaying the number of non commercial positions in the market – non commercial is taken as code for speculators. To be honest I am never fully convinced about such arguments since in many ways it is postdictive in nature. These are rationalisations after the fact. The only facts we know about with certainty is that the market had gone up a lot and then come back less than a lot and if you look at any trend following system with a reasonable stop in place this pullback would not yet have caused you to take any action.
Markets go up, markets go down – the reasons for this are largely irrelevant.
