J.M. Hurst's Principle of Commonality suggests that major markets worldwide bottom at approximately the same time. Consequently, my phasing analysis for the S&P 500 is very similar not only to other US stock indices, but also to the CRB index, crude oil, and global equities.
Long-Term Phasing: The
2003 trough initiated a new 54-year Kondratieff cycle, whose first 18-year
cycle (a 17.17-year Kuznets swing) concluded with the May 2020 low. This
trough was a "straddle to the right," a timing deviation caused by the
swift, exogenous shock of the COVID-19 pandemic.
S&P 500 (daily bars) from 1999 to November 2025.
The 18-year cycle subdivides into two 9-year cycles. Crucially, the major 2008-2009 decline is considered a "false break" that does not negate the 2003 low. Following 2020, the first 54-month (Kitchin) cycle completed in August 2024, and the S&P 500 is now progressing through the second.
Analog Selection and Projection: The market action preceding the 2008-2009 crisis must be negated as an analog because it was driven by an exogenous factor that broke the 2003 low, a condition entirely absent in the current cyclical environment.
S&P 500 (daily bars) from January 2023 to November 2025.
The projection of the 40-week cycle has a 95% out-of-sample correlation.
Lacking the preferred 18-year analog (typically required for a correlation coefficient >0.8), we utilize the 9-year cycle position to project the current 18-month cycle. After synchronizing the 40-week cycle troughs, this model proved highly effective, demonstrating a 95% out-of-sample correlation. Instead of a direct price overlay, the optimal approach is to detrend this projection and apply it to the RSI. This detrended analog shows a high correlation, suggesting a three-swing pattern for the US equity market, which is currently in the anticipated downswing.
Short-Term Outlook: The short-term cyclical position projects an 80-day cycle trough around November 14-16 (Fri-Mon), followed by a rally into early December, before a final selloff into year's end.
S&P 500 (daily bars) from June 2024 to November 2025.
Decline into 80-day low around November 14-16 (Fri-Mon); rally to December 8 (Mon) high;
final decline into an 18-month or 40-week cycle low around December 25 (Thu).
Conversely, the more dominant 9-year cycle analog suggests a period of sideways consolidation near current levels. Under this model, new highs are unlikely to be significant, and the market will largely trend sideways until the 18-month cycle trough is established.
Reference:
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