Study guide
11.2 Common Cycles
CMT Level I Chartered Market Technician
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1 Introduction and Exam Overview
1.1 Current CMT Level I Exam Facts 1.2 Charter Path and Study Plan
2 Theory and History Foundations
2.1 A Brief History of Technical Analysis 2.2 The Dow Theory 2.3 Markets, Instruments, Data, and the Technician
3 Market Hypotheses and Fibonacci
3.1 The Efficient Markets Hypothesis 3.2 The Fibonacci Sequence and the Golden Ratio
4 Chart Types and Construction
4.1 An Overview of Charting 4.2 The X Axis 4.3 The Y Axis 4.4 Charting Volume and Open Interest
5 Trend Analysis
5.1 What Is a Trend 5.2 A Trend's Four Phases 5.3 Trend Identification and Following
6 Volume, Open Interest, and Internals
6.1 Introduction to Volume Analysis 6.2 Volume, Open Interest, and Price 6.3 Market Internals
7 Chart Pattern Analysis
7.1 Classical Chart Patterns 7.2 Introduction to Candlesticks 7.3 Introduction to Candlestick Patterns 7.4 Basics of Point-and-Figure Charting
8 Internal and External Technical Indicators
8.1 Moving Averages 8.2 Technical Indicator Construction 8.3 Introduction to Bollinger Bands
9 Statistics for Technicians
9.1 Introduction to Statistics, Part 1 9.2 Introduction to Statistics, Part 2 9.3 Introduction to Probability
10 Behavioral Finance and Sentiment
10.1 Behavioral Finance 10.2 Market Sentiment and Technical Analysis 10.3 Sentiment Measured from Market Data 10.4 Sentiment Measured from External Data
11 Cycle Analysis
11.1 Foundations of Cycle Theory 11.2 Common Cycles
12 Equities, Indexes, and Fixed Income
12.1 Equities 12.2 Indexes 12.3 Fixed Income and Bonds
13 Futures, ETPs, and Currencies
13.1 Futures 13.2 Exchange-Traded Products 13.3 Foreign Exchange
14 Digital Assets and Options
14.1 Digital Assets 14.2 Options
15 Relative Strength
15.1 Introduction to Relative Strength 15.2 Relative Strength and Its Uses
16 Volatility Analysis
16.1 The Meaning of Volatility to a Technician 16.2 Measuring Historical Volatility 16.3 Options-Derived Volatility
17 Systematic Methods and Ethics
17.1 Introduction to Quantitative Methods 17.2 Code of Ethics 17.3 Standards of Professional Conduct
11.2 Common Cycles
Key Takeaways Explain This Topic AI
Named economic periods to memorize: Kitchin about 3-5 years (inventory), Juglar about 7-11 (fixed investment), Kuznets about 15-25 (building), Kondratieff about 45-60 (long wave).
The business/inventory story splits Kitchin (restocking loop) from Juglar (plant-and-equipment loop); equity prices often turn before activity labels.
The US presidential/election cycle is a four-year calendar; historical averages are softer in years 1-2 and stronger in year 3—a tendency, not a dated low.
The annual cycle fits cycle theory with a 12-month period, amplitude, and phase; seasonal tools include monthly tables, year-over-year overlays, and seasonal indexes.
Fibonacci time and 3-wave versus 5-wave language are nonlinear sequences; Level I wants recognition of named periods, not a forecast of the next trough.
Last updated: September 2026
Named cycles are still Classical Techniques on CMT Level I. Section 11.1 gave you the wave object. This section is common cycles : the named economic periods , the business/inventory story, the US presidential/election cycle, seasonal tools, and sequence / nonlinear language (Fibonacci time; 3-wave versus 5-wave as counting words only). The Level I job is recognition of named periods , not a forecast of the next trough. Independent ExamFinch material for these CMT Level I topics stays inside that job.
If a stem asks "which cycle is associated with about 7 to 11 years," the answer is Juglar , not a dated call that the next Juglar low is March 2028. Variation (11.1) already warned you that actual lengths flex. Summation already warned you that other waves add in. Treat every named clock as a label with a range , then stop.
Notable economic cycles and their periods
Economists named several inventory and investment waves. Technicians borrow the names as period labels . Memorize the range , the usual economic story , and the person's name . Do not memorize a trough date.
Name Typical period Economic story Technician's use
Kitchin (Joseph Kitchin) about 3–5 years (often ~40 months) Inventory : firms over-order, then destock Shortest of the classic named set; neighborhood of many "four-year" market talks
Juglar (Clément Juglar) about 7–11 years Fixed-capital investment : plant and equipment boom and bust Often treated as "the" business-investment cycle
Kuznets (Simon Kuznets) about 15–25 years Building / infrastructure (housing, construction) A longer swing than Juglar; not a 4-year election clock
Kondratieff (Nikolai Kondratieff / Kondratiev) about 45–60 years Long wave : technology clusters, credit, prices A generation-scale label, not a weekly timing tool
Worked recognition: "A 50-year technology-and-credit wave" is Kondratieff . "A 4-year inventory swing" is Kitchin . "An 18-year building boom" sits in the Kuznets band. "A 9-year capex cycle" is Juglar . Mixing Kuznets with Kondratieff because both are "long" is a common miss. Mixing Kitchin with the presidential cycle because both are "about four years" is the other common miss—one is an inventory story, the other is a political calendar .
These names are not Hurst's nominal ladder, though they live in the same neighborhood of thought. Hurst's 54-month teaching length sits near Kitchin; his 18-year length sits near Kuznets. On Level I, if the stem says Kitchin , answer 3–5 years / inventory . If it says Hurst nominal , answer the harmonic set idea from 11.1.
Business and inventory cycles
In market talk, business cycle is the expansion–contraction of activity (output, employment, profits). Inventory cycle is the shorter restocking loop inside that: production overshoots sales, inventories pile up, production is cut, inventories are drawn down, production revives.
Kitchin is the named inventory cycle (~3–5 years). Juglar is the named fixed-investment cycle (~7–11 years) that many textbooks treat as the classic business-investment rhythm. A technician does not need NBER recession dates memorized. You need to know that inventory is the short named wave and fixed investment is the longer named wave, and that equity prices often lead activity—so a market cycle can turn before the economic label turns.
Worked contrast: a manufacturer builds extra widgets for two years, then spends a year clearing the warehouse. That restocking loop is Kitchin-scale . A manufacturer spends a decade building a new plant, then lives with overcapacity. That capex loop is Juglar-scale . Housing stock and highway build-outs that take a generation of construction are Kuznets-scale . A cluster of new general-purpose technologies that reprices capital over half a century is Kondratieff-scale .
Do not call every 4-year stock-market rhythm "Kondratieff." Do not call a one-month farm seasonal a Kitchin cycle. Do not treat "business cycle" as a fifth named period with its own exclusive year count; it is the activity story that Kitchin and Juglar are already labeling at two different lengths.
Presidential and election cycles
The US presidential (election) cycle is a four-year calendar cycle tied to the presidential term. It overlaps the Kitchin neighborhood in length; it is a political-calendar story, not an inventory story.
Historical teaching in the Stock Trader's Almanac tradition, and in later empirical papers, is a tendency , not a law:
- Year of the term Common historical sketch (US equities)
- Year 1 (post-election) Often softer as policy change is digested
- Year 2 (midterm) Often the weaker half of the term; volatility around midterms
- Year 3 (pre-election) Often the strongest year in long almanac averages
- Year 4 (election year) Mixed-to-positive on average; not "the" strongest year
A typical compact sentence: weaker first half of the term, stronger second half , with year 3 often the standout in historical averages. Widely cited almanac-style long samples have put average returns on the order of about 3% post-election, 4% midterm, 10% pre-election, and 6% election year. Those figures are sample history . They can fail in any single administration. Level I wants you to name the four-year clock and the qualitative year-order , not to bet the sitting.
The presidential cycle is a seasonal/calendar-style time cycle: the period is fixed by the election calendar , while amplitude and phase vary (the variation principle from 11.1). A midterm year that rips higher does not "disprove" the name of the cycle. It reminds you that a named period is not a forecast engine.
Seasonal cycles and the annual cycle
A seasonal cycle is a calendar rhythm that repeats because the same dates keep coming back : winter heating demand, harvest pressure, January rebalancing, "sell in May" commentary, turn-of-month flows.
The annual cycle fits cycle theory because it has a period (12 months), an amplitude (typical high-to-low seasonal swing), and a phase (where in the year the typical crest and trough fall). It is a seasonal/calendar cycle with a fixed period . Agricultural markets often show clearer seasonals than a broad equity index; equities still have a researched annual shape (historically stronger November–April windows in many almanac studies)—again a tendency .
Common seasonal tools (the objective to restate them):
- Monthly seasonality tables (average return by calendar month)
- Year-over-year overlays or "same week last year" charts
- Seasonal indexes that average several years into one 12-month path
- Detrended monthly bars so the seasonal oscillation is not swallowed by a 10-year bull market
Two detrend methods from 11.1 still apply: subtract a moving average (or trend), and inspect a centered average so the seasonal wave is not lagged. Seasonals are easier to see after the trend is removed. That is how the annual cycle "fits" the 11.1 object: it is a 12-month time cycle whose phase is calendar-named (August low, January high, or whatever the market's own history shows).
Exam trap: calling a 54-year Kondratieff wave a "seasonal." Seasonal means calendar-locked inside the year (or another diary unit such as week or month), not "any cycle with a name."
Sequences and nonlinear cycles
Not every useful count is a constant period. Nonlinear / sequence tools stretch or skip in a pattern that is not one repeating wavelength.
Fibonacci time uses the same additive sequence you met in the Fibonacci unit (1, 1, 2, 3, 5, 8, 13, 21, 34, …). From a significant trough or crest, you count 8, 13, 21, 34 bars or calendar units as candidate time windows . The gaps grow . That is why this is a sequence , not a 21-bar time cycle. A 21-bar time cycle would keep printing ~21, ~21, ~21. Fibonacci time might print interesting windows at bar 13, then 21, then 34 from the same origin . It does not replace Hurst summation, and it does not guarantee a turn on bar 21.
3-wave versus 5-wave is sequence language , not an Elliott Wave course. In that vocabulary, a five-leg sequence is the usual way to describe a completed directional move (impulse-style counting). A three-leg sequence is the usual way to describe a countertrend move (corrective-style counting). Level I may ask you to recognize that 5 versus 3 is how some technicians count a completed sequence . It is not asking you to label every retracement with degree notation, or to trade "Wave 3." If you need Elliott structure, that is a later, heavier unit. Here, remember: 5 ≈ directional sequence, 3 ≈ corrective sequence , as counting words.
- Tool Linear (fixed period)? What you memorize
- Kitchin / Juglar / Kuznets / Kondratieff Named ranges , not exact clocks Period band + economic story
- Presidential cycle Fixed 4-year calendar Year-order tendency, not a dated low
- Annual / seasonal Fixed to the diary Period 12 months; tools = tables, overlays, seasonal indexes
- Fibonacci time Nonlinear sequence 8, 13, 21, 34… from a pivot
- 3-wave vs 5-wave Nonlinear count 5 ≈ directional sequence; 3 ≈ corrective sequence
- Worked recognition, not a trough forecast
Stem: "Which cycle is associated with inventory overshoot over about 40 months?" Kitchin .
Stem: "Which cycle is a 15-to-25-year building swing?" Kuznets .
Stem: "A technician counts 13, then 21, then 34 sessions from a crash low." Fibonacci time , not Juglar.
Stem: "Price traces five legs up and three legs down." Sequence language for a directional sequence then a correction—not a Kondratieff dating.
What you should not do on Level I: announce that the next Kondratieff winter begins on a specific quarter, or that the next presidential-year low must print in calendar year two. Variation and summation (11.1) already tell you why a single named clock fails as a prophecy: other waves add in, and actual periods flex. Recognition of the name and the period band is the scored skill.
Key Takeaways
Kitchin ~3–5y inventory; Juglar ~7–11y fixed investment; Kuznets ~15–25y building; Kondratieff ~45–60y long wave
- Business/inventory: Kitchin is the inventory loop; Juglar is the capex loop
- Presidential cycle: 4 years; historically weaker first half, stronger year 3—a tendency
- Seasonal/annual: calendar-fixed period; tables, overlays, seasonal indexes
Fibonacci time and 3-versus-5 counts are sequences; Level I = recognize names and periods, not forecast the next trough