Overlapping Decline - Market Analysis for Feb 3rd, 2016

With the follow through to the downside today, the market has not done so in what would be ideal impulsive structure. This opens the door to multiple possibilities, yet maintaining the higher probability that lower lows are still coming.

The first is that the 4th wave has not yet completed. In that case, we can still see further downside into the end of the week towards the 1830-1850SPX region to complete a bigger (b) wave as noted by the yellow count.

The next is that the 5th wave down is going to take shape as an overlapping ending diagonal, with this just being either all of wave 1 down, or just the a-wave of wave 1 down.

Unfortunately, it is difficult enough to determine when an overlapping 4th wave has completed. But, when the moves out of what could be the completion of a 4th wave is overlapping, it makes such determinations infinitely more complex.

Moreover, please review the TF chart for the potential of the larger degree 4th wave, as presented last night.

Lastly, if we are to see a strong move from here over the 1945SPX region, that is the only way I would be even able to consider any bullish alternative, as presented in green.

So, in conclusion, I cannot say I have a preference YET as to how this market will unfold, but the greater probability is that lower lows are still coming. The market has still not provided us with the clear answer for “how.”


Avi Gilburt is founder of ElliottWaveTrader.net.