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Stocks in correction mode as global markets swoon

Traders on the floor of the New York Stock Exchange
Brendan McDermid | Reuters

Stocks skidded Friday, on the back of weaker commodities, and appear to be heading for the biggest correction in at least the last year.

The S&P 500 collapsed through a key support level at 2,004, and was trading down below 2,000 Friday afternoon. Technicians are eyeing the next stop at 1,980. The S&P is down almost 4.5 percent this week, and is now off about 6.5 percent from its all-time high in May.

Its last biggest pullback was in October 2014 when it fell 7.5 percent on a closing basis, and while this drop could be greater, it's still not seen as a major double-digit correction that would drag stocks into bear market territory. The Dow, meanwhile, is already down 9.3 percent from its May close, a steeper decline than the 8.6 percent move lower in October, 2014.

"Based on what I'm seeing, I see no reason to get in front of this," said John Kosar, chief strategist at Asbury Research. "I think at some point, within the next month or so, there will be a really good opportunity to buy, but it's not time, it's price. We'll see investor sentiment get bearish, and we'll see volume crank up, and that's when you start to look for a bottom."

The Dow was off 4.3 percent and the Nasdaq was more than 5 percent lower. The Russell 2000 was down 4.5 percent and is now in official correction territory with a more than 10 percent decline. The VIX, meanwhile is soaring, jumping at one point to its year high above 24, and is now on track for its biggest monthly gain of more than 100 percent.

"This is a scare going on right now, and people are looking for a story line. The story line is that there's growth weakness and the VIX, volatility, doesn't stay high on simply weaker growth as long as you don't have a recessionary problem," said Jonathan Golub, chief U.S. market strategist at RBC Capital Markets.