Quite The Pullback - Market Analysis for May 1st, 2019

So, the market decided to drop a bit further than expected right into the close.  Clearly, this drop is not the b-wave of (v), but may still be completing wave (iv).  Unfortunately, I am only left with hypothesis because the structure has been very overlapping which does not often leave anything for us to view as a high probability perspective other than likely topping in wave 3 off the March lows.

Now, in regards to having a top in place for wave 3 off the March lows, I have to be honest and say that I really do not have a completed pattern to which I can point which would suggest that wave 3 is done.  But, right now, it is all a matter of support and resistance. And, that is going to be more important than attempting to identify the ideal topping structure, especially for a market that has been so stretched to the upside.

As I have been highlighting, below us now is the 2912/15SPX support.  While the market can hold that support and still take us to the target box overhead, I would have to note that it would be viewed as an expanding ending diagonal, and they are quite rare.  But, I would imagine it would be par for the course based upon the rally we have seen off the December lows. 

Yet, should we break below 2912SPX, then I would either have to view wave 3 as having completed short of its target, or it could also suggest that this [c] wave is morphing into an ending diagonal (sigh).  And, due to the unfinished pattern into that last high, I would view the yellow alternative b-wave as having topped as lesser likely, until we see a sustained break of 2850SPX, as outlined in the weekend update.

I also want to point out that the failure of the market to complete a well structured wave pattern up here is a warning to me.  And, while I would still love to see the pattern complete into the 3011-45SPX region, if the market is going to break below 2884SPX, the likelihood of getting that high begins to seriously diminish.  And, should that occur, it may not be until 2020 that we see those levels.

So, I would want to see the market resurrect and spend the rest of the week completing wave [v] of 3 with a rally tomorrow.  Otherwise, things can become a lot more complex, right at the point where the market was finally within the last throes of trying to complete a 5th wave structure.  I am still hopeful we can complete that 5-wave structure towards the 3011-45 region, and the rest of this week will hopefully confirm my expectations.

And, for those that are still wondering, nothing has changed my expectations yet for a larger degree decline as we look towards the last half of 2019.

Avi Gilburt is founder of ElliottWaveTrader.net.