[Soultrader]

I was reading an article on spread analysis today and there are some points I have yet to comprehend completely. The article focused on using the spread as a leading indicator to sense bullishness or bearishness in the futures market.

The futures market is classified into 3 groups of market participants: noncommercial, commercial, and nonreportable. As an intraday trader, we need to follow the footsteps of these noncommercial traders as they reported to make up approx 80% of the total volume. Noncommercial traders are referred to as the big boys or the large speculators in the markets.

The question I have is regarding the activity by these noncommercial traders to push the nearby contract in relation to the deferred contract. The article mentions when the spread is narrow, noncommercial traders hold a neutral to bearish outlook while a wider spread would indicate a bearish outlook.

Can anyone explain this concept to me? Why would traders trade the future contract and not the current? How can one apply spread analysis to their trading? Thanks