Market Cycles & Seasonality for the CMT Exam: Kitchin, Juglar, Kondratieff & Calendar Effects

Market Cycles on the CMT Exam

Cycle analysis is a key component of CMT Level 2 (Fibonacci & Cycles — 15% weight). Understanding cyclical patterns enhances trend analysis and complements Gann Theory and Elliott Wave.

For the complete overview, see the CMT Exam Guide 2026.

Named Economic Cycles

Kitchin Cycle (3–5 years)

Short-term inventory cycle driven by business inventory build-up and liquidation. Visible in sector rotation patterns.

Juglar Cycle (7–11 years)

Fixed investment cycle tied to capital expenditure — often aligns with business cycle peaks and troughs.

Kuznets Cycle (15–25 years)

Infrastructure and demographic cycle linked to construction and population trends.

Kondratieff Wave (45–60 years)

The "long wave" — major technological and societal shifts:

• Spring: Innovation and growth
• Summer: Inflation and commodity booms
• Autumn: Financial excess (speculative bubbles)
• Winter: Deflation and deleveraging

Seasonal Patterns

Seasonality studies show statistically significant calendar effects:

Monthly Patterns

Presidential Cycle

• Year 1 (Post-election): Below-average returns
• Year 2 (Midterm): Weakest year, but midterm lows set up rallies
• Year 3 (Pre-election): Strongest year (stimulus)
• Year 4 (Election): Above-average, especially H2

Decennial Cycle

Years ending in 5 (e.g., 2015, 2025) have historically been the strongest in the decade.

Cycle Analysis Techniques

Identifying Cycles

1. Measure peak-to-peak or trough-to-trough distances
2. Look for recurring intervals on multiple timeframes
3. Use detrending to isolate cyclical components from trends

Cycle Characteristics

• Amplitude: Height of the cycle wave
• Period: Time between cycle lows
• Phase: Current position within the cycle
• Translation: Left (bearish) or right (bullish) position of the peak

Cycle Nesting

Multiple cycles operate simultaneously:

• Long-term cycles set the trend direction
• Intermediate cycles create swings within the trend
• Short-term cycles provide timing signals
• When cycles align, moves are most powerful (see multi-timeframe analysis)

Integration with Other Methods

Cycles combine powerfully with:

• Fibonacci time zones — Golden ratio time projections
• Sentiment extremes — cycles often turn at sentiment extremes
• Market breadth — breadth leads cycles at turns
• Behavioral finance — herding creates cyclical extremes

Practice cycle analysis questions in our test bank. Full guide: CMT Exam 2026.