This analog has been really terrific so far, already forecasting several major reversals over the past several months.  The best is yet to come, with the next key date being July 29.

Rather than have all the charts that illustrate what has happened in the base periods (and, what they portend for the future) spread out in different posts, I’ve gathered them all together here.

Any significant updates to the analog and its forecast will also be posted here.  Think of it as a blog within the blog.  Enjoy!

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There’s a tussle going on in CL at the moment — whether or not to respect the .618 retracement of the rise from the March lows.  This is the next major support following the breakdown of the rising white channel.

How it plays out will have significant impact on stocks over the next week.  Needless to say, it needs to go much lower if yen bashing is going to accelerate.  If the failure of yesterday’s falling wedge breakout attempt is any indication, it will — with 44.71 and 42.41 the only support standing between it and new lows.But, the most important chart remains the USDJPY which — as forecast — is now back below the red channel midline. The 4 sessions it spent above the red midline are a good indicator of just how difficult it is to manipulate every zig and zag of the “markets.”  Fortunately, it all fits in nicely with our current analog, the last few charts of which will be posted below.

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SPX completed its Bat Pattern last Thursday, but has loitered in the no-man’s land between the .886 and the 2134 high while waiting for the eminis to catch up.  Why the big stall?

As we noted yesterday, a changing of the algo guard was required.  With CL finally reaching our 50.11 target overnight, it can proceed.

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Quick update on the overnight action before the update continues from Friday:

ES completed its Bat Pattern at 2122.63 and officially paid off our IH&S that completed last Monday……thanks largely to USDJPY which, from all appearances, has settled above the red channel midline.EURUSD stabilized over the weekend, though we’re probably no more than a day or two from our downside target.With the yen and euro both settling lower, the dollar continues to show strength.  It’s a good place to pick up on the short-term and intermediate forecast.

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With several indices at inflection points and our next critical date coming up in about two weeks, it seems like a good time to update our analog.  For our new members, I first proposed the current analog back on March 27 [see: A New Analog.]  It has been updated numerous times since.

Analogs have been a favorite tool of mine for many years, beginning with the 2011 as 2007 analog that forecast the dramatic July 2011 correction to the day and dollar.  For more on what they are and how they work, see the general post on analogs HERE.So far, this one has done an excellent job of helping to forecast several major moves since March, including SPX’s recent 90-point decline to close below the 200-day moving average.  If it plays out as suspected, it will leave many investors shaking their heads.

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EURUSD is almost to our June 30 target [see: Coming Undone]:

Isn’t it interesting that between March and May, a falling euro was detrimental for stocks (the thin purple line)?  Now, it’s apparently a good thing.

Will the euro finally take over from the yen as the carry trade vehicle of choice?

NYA reversed very close to our June 30 target (in yellow, below)…

…and has rebounded to backtest the broken red trend line a little sooner than expected.  Do or die time for the index.

As Draghi drones on, we’re reminded once again that central bankers abhor “markets” that dare fall while they’re pontificating.

The ECB?  Swiss?  It doesn’t really matter, as the eminis are up 10 points with 15 minutes to go till the cash open.

While EURUSD approaches our long-awaited downside target, the stage is being set for another gap opening for equities that will see them jump up past key resistance points.

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Yesterday’s algo-driven meltup went straight to our upside targets and sat there.  So, our targets are essentially unchanged from yesterday morning, which are essentially unchanged from Monday.

An hour ago, Janet Yellen confirmed the Fed’s plans to raise rates sometime later this year (they won’t.)  And, this seems to have taken the bloom off the overnight ramp job just a bit — though USDJPY is more than making up for it.

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TPTB had two simple goals yesterday: get SPX back above its moving averages and bust the falling channel it’s been in since May 20.  They succeeded on both counts.

We’ve seen this countless times over the past few years since algorithms and HFT took control of the “market.”  Ramp the eminis an inordinate amount (usually on nominally bullish headlines) and, once the cash “market” opens, HFT the crap out of it — a nickel and a dime at a time — until a well-established pattern is busted and/or a moving average is topped.

It’s more subtle than the Chinese technique of prohibiting stock sales.  But, in the end, it’s manipulation just the same.  And, it has turned our normally functioning market into a “market” — where plunging retail sales don’t matter at all.

TPTB also succeeded in tagging both our upside targets — the most obvious on the chart.  From yesterday’s members section:

The first hurdle will be the falling red channel top at 2094-2095 (also the SMA100 @ 2095.16) with a secondary target of the .618 at 2100 (also the SMA50 @ 2099.75.)

The important question we’re left with is whether yesterday’s algo-driven chart busting exercise will hold, or whether it’s more akin to the Jun 18 incident that began in much the same way but resulted in an 84-pt plunge.

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I’m looking for at least a small pullback, with the leading candidate a backtest of the SMA100 at 2095 and the secondary target the SMA20/red channel backtest at 2089.

The eminis briefly and begrudgingly gave up a few points in order to backtest the .618 retrace from the May highs.  They will try to hold the line, but that was a pretty awful retail sales report.  There ought to be more fallout than a few points.

Note, also, that CL should provide some headwinds today as it might finally be allowed to test the .618 at 50.11.  Unless it can regain its 10-day moving average (54.56) I’d want to be short for the next leg down.

More after the open.

UPDATE:  9:46 AM

Note that 2107.89 will also effectively backtest the broken white channel bottom.

Thank CL for the reversal — even though it has failed to retake the white channel bottom or the SMA10, for that matter.

CL is rallying, of course, to cover for USDJPY — which, as we discussed yesterday, has run into resistance at the red channel midline.  This, after trashing the perfectly-formed falling purple channel in order to effect yesterday’s “rally.”

UPDATE: 11:16 AM