20080923 Here is the deal. In the past couple of months, we have seen this drop in equities worldwide and commodities as well. What was happening was the big investment banks, because of their exposure to the sub prime CDs and credit default swaps, all exhausted their capital. Hence they underwent the process of 'deleveraging' and asset liquidation to improve liquidity, causing the massive contraction in equity and commodity prices. Since last Friday and last week's events, where the 5 investment banks now became the two, there was a massive 'cut loss' (Bear Sterns, Lehman, Merrill Lynch), followed by the US rescue package. Thius the events causing the massive selldown is diminished somewhat paving the way for equities and commodities to regress towards their mean.(true value) We see a 50% retracement form recent lows for commodities.

Crude Oil futures chart