After a quiet time in the markets with steady gains throughout 2013, it's been a wild and woolly run in the financial markets in recent days. The S&P 500 Index (SPY) just made a long awaited all-time high, meanwhile Gold (GLD) had its biggest two-day drop in 30+ years. Other commodities have been crushed as well. The best measure of option-trader sentiment and expectations, the CBOE Volatility Index (VXX), popped to over 17 on Monday afternoon, following a test of the multi-year lows around the 12 level.

Let's take a bigger picture look at these moves to gain some perspective. We discuss key downside levels that could be reached (and upside on the VIX), if we see continued volatility increase and potential downside going forward this summer -- but that is not a certainty to occur. The market could well shrug off the recent turmoil -- and gold could stabilize/rebound as well.

First take a look at the SPX Daily Chart below. Assuming the recent high we just made is a significant trend top, we can place a new Fibonacci Retracement based on the November 2012 low to the April 2013 high. This gives several key levels to watch, including 1486 (50% retracement), 1438, 1497, 1534 (other Fibonacci levels) -- note that one of these is right around a key SPX level such as the round 1500 strike and the 1473 SPX trend top reached in September 2012.

SPX Daily Chart

Gold's plunge has been swift and sudden -- the fall just in the past two trading days has been breathtaking in its size and scope. Using the 2013 Continuous Gold Futures data from TradeStation, the 9% drop we just saw was the biggest one day down move over the past 12+ years. Other sources are reporting this as the biggest 2 day drop in Gold since 1980.

On the Gold Weekly Chart below, the key uptrend from 2008 lows to 2011 highs was broken some time ago -- we've been aware of and discussed (and traded) this trend many times -- also occurred in other Commodities such as Silver (SLV) -- and other metals like Copper (JJC) as well.

Note here that 1338 is 50% Fibonacci Retracement, and this was actually hit yesterday according to this data. The rapid nature of the decline, especially over the past two weeks, indicates that the high volatility is likely to continue in the coming weeks/months. Key levels on this chart to watch going forward in 2013 (round level/Fibonacci Retracement level): 1000/1017, 1200/1194, 1500/1482, 1650/1659.

Gold Continuous Futures Weekly Chart