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The March Box

The February downtrend has given way to the March trading range. The SPX is now tracing out a rectangle pattern that I’m calling The March Box (click to enlarge):

Notice that the short-term low on March 3rd came right at the 61.8% Fibonacci level giving us a beautiful golden rectangle.

Now, we know that when prices break out of a rectangle they usually trend a distance equal to the height of the rectangle. So, in the next chart I have duplicated the March Box twice and put one copy on top of the March Box, and one below. Now we have the Box of Zoom and the Box of Doom:

As prices bounce around in the March Box, they will build up enough kinetic energy to plunge to the round number of 600, or rally up to the Gap of Doom around 800. The Fibonacci levels inside the boxes will likely prove to be important support and resistance levels.

Regardless of which way you think prices will go, it will probably be a good idea to go with the trend when prices move out of the March Box because the market is set up for a big move.

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This entry was posted on Wednesday, March 11th, 2009 at 9:19 pm and is filed under Investing. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

6 Responses to “The March Box”

  1. K says:
    March 11, 2009 at 9:30 pm

    awesomeee analysis.
    everytime i try to draw a box same length in ameritrade the stupid thing self adjusts to whatever it wants. glad i got you for that

  2. George says:
    March 11, 2009 at 10:17 pm

    Nice. Zoom and Doom – LOL!

    Paints a great picture. If I can figure out how to make StockCharts do that and create a dynamic chart, I’ll have it made.

    I luv it.

  3. George says:
    March 11, 2009 at 11:30 pm

    MKB,

    I didn’t see that Ford on Yahoo. Do you have MS Silverlight or the latest flash?

  4. Josef says:
    March 12, 2009 at 4:29 am

    Amazing analysis! Outstanding teacher!

    The link for the golden rectangle is

    http://en.wikipedia.org/wiki/Golden_Rectangle

  5. JO says:
    March 12, 2009 at 7:09 am

    Matt, great post..i have been following the blog in the evening and hope to post some comments on Sat…the last time we had a full moon combined with some other cycle indicators that also exist now, it was Sep 15 08..of course, the market can instead explode higher…in most cases, a full moon in combo with the other cycles i look at usually indicate a major decline, but about 1 in 5 times, a major rally can ensue..so i just use it as one minor indicator to consider possible major turning points..

    I think the market will come below 623 before 2009 is out.. 590′s is not out of the question..but what do I know..i am not the best short term trader in the world !!. certainly not the worst but i am patiently waiting..got a long term buy list ready. and i don’t have as much time to follow things..new job is going OK..

    Keep up the great posts !
    JO

  6. dblwyo says:
    March 12, 2009 at 8:03 am

    George – you can draw rectangles using the annotate feature in Stockcharts but have to be at least a Basic member.

    You can’t save those however unless you upgrade. My understanding, not verified, is that if you save them as a favorite they become dynamic. Given what you do and spend it might be worth the upgrades.

    However I haven’t figured out how to extend the axis enough to dup/mimic what Matt is doing here for us. So THANK YOU indeed. Great analysis and very suggestive.