A bit of a shooting star potential candle was produced today. At one point at the high today the advance/decline ratio was 5.5:1 on the NYSE and the UP/DOWN volume ratio was 8.7:1. Yet the day ended at a mere 1.6:1 on both. Lots of churning again.
A leading expanding diagonal triangle may be in the making. There are no clear-cut impulses down yet the subwaves and count does fit into a leading diagonal count. Lets review our guidelines for leading diagonal triangles:
Per Elliott Wave Principle (Frost/Prechter):
- Waves 2 and 4 of a leading diagonal always subdivide into zigzags.
- Waves 2 and 4 each usually retrace between .66 to .81 of the preceding wave
So the guidelines are being followed so far with each wave ii and iv having retraced above 62% of their preceding wave.
The subwaves since the peak price do not have clear impulses down, yet if the pattern emerging is a leading expanding diagonal triangle, they do not have to be. In fact they tend not to be. We need a lower low to confirm the pattern.
Here is Prechter on Leading Diagonals in EWP:
"...a leading diagonal can also take an expanding shape. This form appears to occur primarily at the start of declines in the stock market."