The SPX Premarket is down below the Wave A low at 1828.45. The Elliott Wave pattern has morphed into another A-B-C, due to overlap in the Wave structure. What we are looking at is a hybrid Wave pattern that I have not seen before…but it is consistent and repeating. There is not enough time to complete an impulse down to the bottom of Wave (3). However, there is enough time for a Wave C. It appears that a gap down open is in the cards.

ZeroHedge comments, “Yesterday morning, when musing on the day's key event namely Yellen's congressional testimony, we dismissed the most recent bout of European bank euphoria which we said "will be brief if not validated by concrete actions, because while central banks have the luxury of jawboning, commercial banks are actually burning through funds - rapidly at that - and don't have the luxury of hoping for the best while doing nothing." This morning DB has wiped out all of yesterday's gain.”

Deutsche Bank is now described as “worse than Lehman.” Could this be the catalyst for the plunge?

Initial jobless claims dropped notably last week (from 285 to 269k) but the overall trend (away from the noise) appears in tact. The smoother4-week average remains near 12-month highs and as Goldman notes weakness is widespread - "there is only limited evidence that the rise in claims is due to distress in the energy sector."

TNX has made its largest daily decline in memory this morning. This also confirms the SPX is likely to gap down at the open.

The EuroStoxx Index has touched down beneath 2700.00, breaking the previous low. It may also be in a Wave [c] decline that is scheduled to bottom this week. However, there is a long way yet to go.

Regards,

Tony

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