Commodity prices plunge, stocks extend correction

Good day! It's been a rough week on Wall Street, so hopefully my usual greeting is still met with a happy reply! All 10 of the S&P 500's industry groups took a hit on Thursday as the market extended its correction off last week's highs. Wednesday wound to a close with the market reacting to support on the 15 minute time frame, but after the initial reaction played out, the attempt at a continuation afterhours was met with steep resistance.

The index futures based into Wednesday's closing bell and for several hours afterwards, but the upside breakout in the late evening hours failed to generate strong interest. Instead, the indices crept higher as they hugged support until between 3-4 a.m. ET. This is when the S&P 500 (ES) and Dow (YM) futures struck their 15 minute 200 period moving averages and these resistance levels held extremely well. The gradual momentum on the rally into them helped the futures market turn sharply lower into the early morning as selling hit overseas.

Dow Jones Industrial Average (Figure 1)

In the meantime, the euro fell strongly against the dollar and a week of congestion at highs gave way to an incredibly strong session for the U.S. dollar. The rally in the dollar was not welcome news for everyone though. Silver, gold, and even oil were hit hard. Corrections which began off record highs earlier in the week gave way to complete panic in Thursday's session.

Oil alone wiped out the remainder of its gains from the past two months despite hitting a new high for the year on Monday. Thursday's lows in the United States Oil Fund (USO) corresponded with the 61.8% fibonacci retracement level from the move off this year's highs and back to the year's lows, which hit in mid-February. Crude oil prices even broke below the $100 a barrel level and settled at $99.73. This bring the monthly loss to 12.46%.

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