LEAP was trading down close to 3% off its open today, with the rest of the market following, when it made a small positive push higher off a low of 11.41. The most current trade signal for LEAP was speculating that a triangle B wave had completed itself at the 12.00 high on 11/5/10, and the E wave began on 11/11/10. The A wave low is 10.68 on 10/27/10.
In the chart below this scenario is marked out in yellow. The large volume day that LEAP had at its 11.33 wave E projected target, with a low of 11.34 on that day, suggested that trading above wave B high would signal the beginning of wave 1 of wave 5. This was outlined in the previous watch list articles.
With todays price action still suggesting that wave 1 is intact the trade is still good. Although not a friendly place to enter the trade, 100% retracement is acceptable for wave 2 correction. For those long LEAP, tomorrows open will likely make short work of the waiting game that went on today. That is, is the projected E wave complete and will wave 1 hold its projected low?
If the trade fails, here is follow through of the other trading scenario that was previously mentioned and outlined briefly. Basically it suggests, what if the triangle has not completed yet? The 11.10 wave C price target of the projected triangle could be the next support level for the same triangle to wave 5 trade.
This is highlighted in purple on the current chart below. The extended wave B could have resulted from an irregular 5 wave count of the B wave, in which the 12.00 price target is wave 5 of 5 and underperforming relative to projections. 12.43 is a projected irregular wave B of a simple correction lower off the wave A low of 11.36. Incidentally, wave C of the simple correction of this irregular pattern would be 11.18, close to the wave C of the triangle correction.
This could explain the lack of divergence shown in the MACD at the 12.44 price point. In the previous write up however, there was nice divergence at the 12.16 price target in the smaller time frames chart. It is important to keep in mind that this new speculation for why LEAP may not hold its projected wave E low does not signal that wave 1 of wave 5 has started nor does it verify that the triangle is not in play.
The only reason to speculate that wave 1 has begun is because of the evidence of volume and price at projected wave E. Otherwise, it could be that wave B was an irregular wave 5, and not breaking out of a completed triangle into wave 1 at the 12.44 price high as anticipated. If so, LEAP may trade to 11.10 for support at the projected wave C price and must hold its wave A low or the analysis is wrong for a triangle at this time frame.