Water diamonds happen when the angle of incidence changes from flat water reflecting the sky to a small wave with an incident angle allowing you to see into the water. It appears darker. Their characteristics are one or more pointed tops and a rounded bottom.
The black lines indicate concentric rings around you, the red outlines show an array of water diamonds, each with it's pointed ends on an imaginary concentric ring. With a little practice you can make this water diamonds with a stroke of a flat brush.
One day per year the sun is directly above you, on this day, on my sailboat, I saw thousands of little diamonds reflecting the white light of the sun all around me. It lasted for a minute or so.
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