Someone mentioned that my banking index leading diagonal should be 5-3-5-3-5 and not 3-3-3-3-3. My EWP book says the "jury is out" on a strict definition and maybe there is one by now and I didn't get the word. Regardless I relabeled it as a 5-3-5-3-5 and it probably works best this way.
Its kind of like a hybrid between impulses and corrective zig zags which is I suppose what a leading diagonal is all about. Its an actionary/impulsive wave moving with the market's ultimate larger trend (down) although it didn't really want to but it couldn't help it. Banks have led this bear market since before the Oct 2007 top was in why would it change now?
If tomorrow corrects the SPX backwards toward the 920's, I will be looking at this $BKX chart looking for a new low on some kind of falling wedge pattern which is a ultimately a bullish reversal pattern. Then on any SPX rebound higher, financials are due to join the rally and help the SPX get over 950. A deep-ish (leading diagonals can retrace deeply) retrace back upwards would be a perfect fit with my 988 top.
So this chart pattern could fit a new low with a market pullback to 925 tomorrow (B wave low) and then a rebound on a C wave market thrust higher would correspond to this banking index retracing a Minor wave 2 back up.
This chart is one reason I am looking at a P2 top very soon. Its also one reason I am looking for another SPX push because the banks will be due to rally a bit after it finishes its leading diagonal.
Well at least it makes sense at the moment, lets see if it all pans out.