One great thing about analogs is how they provide a backdrop of reasonableness for the strange goings-on in the “markets.”  Consider oil’s dump on Friday, and follow through yesterday, on — surprise! — news that the Vienna OPEC deal might be in trouble.

Recall that this was the same deal countless players were touting as almost certain to come together (and, I’ve been touting as dead in the water) for the past two weeks.

While futures responded by shedding some of their gains, the more important factor — especially now that CL is rebounding again — is where they fell to.

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Oil’s rebound has been almost comical — and, of course, timely.

DX’s reversal at the white .618 is a headwind for stocks.  But, it can linger here for a while given the upcoming FOMC action.

USDJPY, which reversed in sympathy to DX’s Fib tag, made a strong recovery (almost) at the SMA10.

Note that oil’s decline was enough to drive ES down to backtest the channel it just broke out of, at which point it has put in an impressive rebound.The equivalent for SPX would be another tag of its channel at 2206.25ish.  Though, I should point out that there’s a gap to close at 2204.80.

VIX has blessed the idea of a modest backtest with a convenient gap back above the rising red channel bottom.The daily chart looks even more hopeful for the bulls.

UPDATE: 11:12 AM

The gap has been closed and the SMA5 200 tagged (close enough, it’s at 2203.18.)  We were looking for a tag on it last Wednesday that didn’t quite occur.  Back to long here at 2203.76.  

Watch your stops, as the next support isn’t until the previous high at 2193.81.  VIX should react with a gap close once SPX is ready to reverse.

Even DB looks to have reached pretty solid support — double channel line support.  Recall we shorted at 16.72, looking for the SMA200 or lower.  A successful backtest of the falling red channel opens up the .236 at 16.90 and the .382 at 20.43.

UPDATE:  1:04 PM

Could be a headfake, but SPX just dropped through the SMA5 10.  I’d ditch the long position here.  I wouldn’t short just yet.  I assume it’ll pick back up at the SMA5 20.  If not, it might be looking to finish the job of tagging the SMA5 200.  The analog suggests this is a blip in the midst of a continuation higher — unless the timing has changed a bit.  More on that in a moment.

Unless VIX pops back above the SMA5 200, this is only a pause.

It’s likely just an attempt to let CL settle to TL support.

UPDATE:  1:17 PM

Here’s the SMA5 20.  Back to long at 2207.36.  Note the purple TL, which could be the target of a backtest slightly lower.

Re the analog…note that tomorrow is day 100, which was an interim high in 2007.  Given that our day 84 provided a bounce, when the equivalent day in 2007 was 88, the analog could be off just a bit.  We should know pretty soon, as ES has a perfect setup for a little IH&S up to 2216.50.

If it fails to remain above its SMA5 200, the current bounce is going to fail.  Note that CL is back to the yellow neckline, meaning those who got caught in the weekend debacle are likely to be dumping.

UPDATE:  2:19 PM

Another warning sign, here, as the SMA5 10 is again under duress.  Back to cash.

I’ll likely short if ES drops below its SMA5 200 at 2205.25.

UPDATE:  2:23 PM

Shorting here at 2207.36.  The initial target is the SMA5 200 at 2205ish.  After that, no support until 2193.81.

UPDATE:  3:23 PM

If we ignore Wednesday’s low, we can draw the channel bottom such that it passes through the SMA5 200 here. It makes any drop through the SMA, as is occurring right now, more bearish.  I’d stay short, but watch for any signs of a rebound, especially by VIX and CL.

If the day 100 analog high has, indeed, come a day early, note that in 2007 the drop between day 100 and 104 amounted to 57 points.  It was 3.8% and took 4 sessions.  FWIW, that would be the equivalent of 84 points to 2130 by Thursday.

We do have a downside target at 2136ish on Dec 5 — which is our day 104.  It’s a backtest of the broken falling white channel that was set up following the Brexit spike.  It’s not a bad target from a Fib standpoint, as the .618 of the spike from pre-election 2083.79 is 2133.28 and, of course, there’s the 2015 high right there at 2134.72.

There are a number of potential targets that are higher, such as the 2194 former high and the purple channel midline.  So, I’d look at this as a wait and see.  I have no problem holding short overnight, though there’s always the risk this is a headfake.  So, as always, only hold short if you can hedge or stomach the risk of a gap higher.