No Comments Written by Anthony Truong on March 20, 2008 – 1:08 am

The charts attached are my revised counts after yesterday’s powerful rally. I realised after reviewing the patterns that I was being much too lax with Elliott’s rules, and clear wave structures were actually present, but I was “counting” so that it would fit my bias.

Yesterday’s “Fed induced rally” was a perfect 5 wave impulse, followed by a flat correction in 4th wave during the overnight, followed by a clean 5 waves up in 5th to complete wave C of an A-B-C flat correction.

I am still putting question marks after waves 1 and 2, as I am still not convinced that this is what is transpiring. However, if we have just completed a flat wave 2, this suggests wave 3 down is coming, which should prove to be a huge impulse down.

Again, I emphasise that I think we are within a final 5th wave in a larger 1st wave down of an even larger C wave (see the last US Equities update on 18 March 2008) which began at the peaks of last October. There are a number of other operative counts (namely we could still be in a large 4th wave triangle; recent low and yesterday’s high may not have been “1″ and “2″ but rather “3″ and “4″ of an ending diagonal, which would also fit the 5th wave count I’m following but won’t be as heavy to the downside), but I continue to anticipate hefty losses in the weeks ahead.

Down is the short-term forecast; depending on how hard the indexes fall, this will determine what kind of structure is playing out.