Market Cycles 101

Today’s read posts after the close.

Markets do not move in straight lines and they do not move randomly either. They move in overlapping waves of reasonably regular duration, and once you have seen that clearly it is difficult to look at a chart the same way again.

This page is the starting point. It is deliberately not the advanced version, and it avoids the machinery in favour of the idea, because the idea is what most people are missing.

The claim, stated carefully

The claim is not that markets are periodic like a pendulum. Anyone who tells you a market turns every N days on schedule is selling something, and the schedule will fail publicly and soon.

The claim is weaker and more useful: price contains components of roughly regular duration, several of them at once, and their sum is what you see on the chart. A long slow component, a medium one, a short one, all running simultaneously. The chart is the total.

That framing explains something a trend-following view struggles with. It explains why a market can be rising and falling at the same time depending on what you are looking at, and why two competent people can look at the same chart and honestly disagree about direction. They are reading different components.

Why the sum looks messy

If you add several waves of different lengths and different sizes, the result does not look like a wave. It looks like a jagged, irregular line with occasional clean stretches, which is exactly what a price chart looks like.

The clean stretches are when several components happen to be pointing the same way at once. The messy stretches are when they disagree, with one pulling up while another pulls down, producing chop that frustrates everyone.

This is the single most useful thing the cycle view gave me, and it arrived as a relief. Choppy markets are not a failure of analysis. They are what disagreement between components looks like, and recognising one is far more valuable than trying to trade through it.

Nesting: the ladder

The components are not arbitrary lengths. They tend to sit in an approximate ladder where each is roughly half the one above it, and that structure is stable enough to be useful across markets and eras.

The practical consequence is that you are never analysing "the" cycle. You are placing price within several at once, and the interesting moments are when they line up. A short-cycle trough that coincides with a longer-cycle trough is a materially different event than a short-cycle trough occurring while the longer component is still falling, even though both look similar on a chart.

The ladder itself, with its approximate durations, is laid out in the nominal cycle ladder, and the workhorse rung for active trading is covered in the 80-day cycle.

Troughs, not peaks

Cycle work concentrates on lows rather than highs, and the reason is empirical rather than aesthetic: lows are simply better behaved. They tend to arrive closer to their expected timing and to be more clearly defined than highs.

Highs are messier because of translation, which is the observation that a cycle's peak can sit early or late within the cycle rather than in the middle. When conditions are favourable the peak drifts later; when unfavourable, earlier. That drift carries information, and it is one of the more genuinely predictive things in the framework, but it means peaks are a poor thing to anchor measurement on. Cycle translation covers it properly.

So the discipline is to count from lows, expect the low to arrive within a window rather than on a date, and treat highs as something you observe rather than something you schedule.

What this does not give you

It does not give you dates. It gives you windows, and windows are wide. A trough expected within a range of days is a genuine statement; a trough expected on Thursday is not, and I do not make that kind of claim.

It does not give you direction on its own. Knowing where price sits within a cycle tells you what phase you are in, not what happens next, because the larger components are still running and can override.

It does not work equally everywhere. Liquid, widely traded markets carry cleaner structure than thin ones. Anything can be disrupted by news large enough to reset the picture, and pretending otherwise is how people end up defending a count against a market that has moved on.

And it is not a machine. There is real judgement in reading a cycle position, two competent practitioners can disagree, and the judgement is where both the skill and the errors live. Anybody presenting this as mechanical and objective has left out the part that matters.

Why bother, then

Because it answers a question nothing else answers well: not what is happening, but where you are inside what is happening.

A rally in the early part of a longer cycle and a rally in its late stages look identical on a price chart and are very different situations. The cycle view distinguishes them. That distinction is context rather than a signal, and context is what stops you from taking a technically fine entry at structurally the worst possible moment.

If you want the deeper treatment, Hurst cycle analysis is the advanced version of this page, and counting a cycle trough is where the practice begins.

Educational market analysis only. Nothing here forecasts any market turn or recommends any position.

Questions traders ask

What is this Market Cycles 101 page?

A dated, running read on market cycles 101 from a trading desk that scores its own calls publicly — hits and misses both.

How often is it updated?

After the market close on trading days.

Is this investment advice?

No — educational market analysis only. Nothing here is a recommendation.