HUGE INSIGHTS: The Big Picture - Issue #52
Prepare for a Full System Reset
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Executive Summary
A Complete Guide to Understanding the Cycle
Macro Perspectives: Economy, Policy, & Rates
Geopolitics: War and Peace
Market Analysis & Outlook: Expect Change!
Conclusions & Positioning: The Nuclear Option
A Complete Guide to Understanding the Cycle
It is widely understood that the stock market adheres to certain cycles, perhaps the most well known of which is commonly referred to as the “seasonal cycle.” The seasonal cycle tends to get a lot of attention this time of year. This is largely because of the tendency for stocks to rally into year-end — a function of the so-called Santa Claus rally and January Effect, or some combination thereof. Yet, seasonality has failed to adhere to its usual path in 2025. For example, the stock market has historically weakened from its Summer highs in August throughout September to bottom in October, then rally in November. That did not happen this year. To the contrary, the stock market was strong through late October — topping on the 29th — before selling off by nearly 6% in November. Nevertheless, many media pundits continue to focus their attention on the expectation of seasonal strength into year-end.
Another cycle that has the attention of investors is the presumed Fed easing cycle. An easing of monetary policy occurs when the Federal Reserve cuts its policy rate. Historically, the Fed has tended to cut rates in 25 bps increments to allow the market to adapt to the impending change to the interest rate environment and its inverse effect on asset prices. Most recently, the Fed began cutting its policy rate by 25 bps following the September 17th FOMC meeting. It did so again by the same amount following the October 29th meeting. According to the CME Group’s FedWatch Tool, there is currently an 87% probability of at least one more 25 bps rate cut at the December 10th FOMC meeting. Odds also favor Kevin Hassett as President Trump’s choice for Fed Chairman when Jerome Powell’s term ends next May. This, coupled with the addition of Stephen Miran to Federal Reserve Board of Governors, raises the odds considerably that the Fed will remain on an easing trajectory in 2026.
The Fourth Turning
But there are cyclical forces of a much grander scale that are also at work. Researchers Neil Howe and William Strauss have collaborated on a number of books that examine historical generations and describe a theoretical cycle of recurring mood eras in American history — now known as the Strauss-Howe generational theory. Howe studied economics and history at Yale University where he earned graduate degrees in both subjects. Strauss earned a J.D. from Harvard Law School and a master’s in public policy from the Harvard Kennedy School.
Most recently, Howe published, The Fourth Turning Is Here: What the Seasons of History Tell Us about How and When This Crisis Will End (2023). The book expands upon the ideas detailed in their co-authored original, The Fourth Turning (1998). Initially, Howe and Strauss argued that Anglo-American history moves in repeating cycles of four “turnings,” each lasting 20-25 years, and the fourth turning is a recurring era of crisis that fundamentally remakes society. The authors then claimed that the United States was on the precipice of such a crisis period, comparable in scale to the American Revolution, the Civil War, and the Great Depression/World War II era.
Howe and Strauss described the four turnings as follows:
First Turning – Spring High: Post-crisis era of strong institutions, optimism, social cohesion, and weaker individualism (e.g., the post‑WWII American High).
Second Turning – Summer Awakening: Spiritual or cultural upheaval where people rebel against established institutions and seek personal authenticity and inner meaning.
Third Turning – Autumn Unraveling: Institutions weaken and are distrusted, individualism peaks, social cohesion frays, and culture becomes more fragmented and contentious.
Fourth Turning – Winter Crisis: A systemic emergency in which institutions are torn down and rebuilt amid intense conflict (often war, revolution, or depression), after which a new order emerges.
During the fourth turning, an external shock or “catalyst” triggers mounting emergencies that eventually force society to choose collective survival over individualism. Civic authority centralizes, public purpose dominates private freedom, and a new institutional framework is hammered out, often through large-scale conflict and sacrifice. The authors emphasize that the fourth turning is not simply doom, but a necessary period of regeneration that can either end in renewal or catastrophe, depending on leadership and public choices. They suggest individuals and communities should strengthen local ties, diversify skills and resources, and be prepared for greater collective discipline and state power as the crisis unfolds.
While the original book forecasted the next fourth turning to occur sometime during the early 21st century, the sequel focuses on concrete evidence that the current fourth turning began around 2008 with the great financial crisis (GFC) and is now “here,” visible in social polarization, institutional breakdown, and rising geopolitical conflict. Howe emphasizes that every living generation will be drafted into this crisis, with Boomers and Gen X occupying leadership roles, and Millennials and Gen Z serving as the main civic and military cohorts. The book argues that the present crisis era will likely last into around 2030–2035, culminating in a high‑stakes “gate in history” comparable to the Revolution, Civil War, or World War II. Howe warns of elevated odds of civil conflict, authoritarian drift, national breakup, or large‑scale foreign war, while also suggesting that, if navigated well, the 2040s could see stronger institutions, renewed social cohesion, and a new civic order.
The Kondratiev Wave
The four turnings of the Strauss-Howe generational theory loosely follows the same economic arc as two of Kondratiev’s 54-year waves as we detailed in Issue #36 (click the link to review), or two 51.6-year commodity cycles, as proposed by Martin Armstrong, of Armstrong Economics — formerly known as the Princeton Economic Institute. As an aside, Armstrong’s life experiences are so extraordinary that there was actually a documentary film — The Forecaster — created in 2014 just to tell his story.
Economic Confidence Model
Armstrong’s “Economic Confidence Model” is built upon the mathematical concept that π = 3.141 and that 3,141 days = 8.6 years, which represents a “Pi Cycle.” Six 8.6-year pi cycles create one 51.6-year commodity cycle, and six commodity cycles create one 309.6-year cycle, which Armstrong calls a major wave.
While the Strauss-Howe generational theory and the Kondratiev Wave are both predicated upon empirical data observed over a long, multi-century history to arrive at their respective conclusions, a backtest of Armstrong’s Economic Confidence Model reveals an uncanny similarity in its ability to consistently identify the peaks and troughs of major waves throughout civilization’s progress dating back to the rise of the Roman Empire — using only math.
All of these long-term economic cycles have a common thread, they all represent a harmonic of a generational period of time equating to approximately one century. One hundred years divided into halves equals two fifty year periods; when divided into quarters it equals four twenty-five year periods, and so on.
The Fibonacci Time-Price Spiral
Another mathematical approach, used to identify the cyclical rhythm of the stock market over the past century, has been proposed by Robert Prechter of Elliott Wave International, the foremost living expert on the subject of the Elliott Wave principle of human social behavior. Prechter, who has long understood that the markets are fractal in nature and move in self-similar wave forms that adhere to a natural rhythm that can be quantified using Fibonacci mathematics, has identified a series of large scale Fibonacci time-price relationships that appear terminal. His analysis of the DJIA below illustrates three cycle degree motive waves within a supercycle degree advance off the 1932 low. Each is a multiple of the other. Prechter writes:
“This set of Fibonacci price relationships uses wave III as a benchmark. As shown, wave I’s multiple was Φ² times wave III’s multiple, where Φ = 2/3, or 0.6666…; and wave V’s multiple, measured from the wave IV low in 1974, was Φ4 times wave III’s multiple, where Φ = 5/3, or 1.6666…”
On November 12th, the DJIA closed at an all-time high of 48,254. Prechter’s ideal wave V upside target for the DJIA based upon this analysis is 47,731. That puts the index just 1.1% above his target. Interestingly, wave I from 1932 to 1937 ended 0.9% below the ideal target. If the DJIA has topped, then the two waves net a direct hit +/- 0.1% on balance.
W.D. Gann’s Financial Time Table
We’ve studied many long-term cycle theories, but none comes close to the accuracy and impact of famed market forecaster W.D. Gann’s Financial Time Table, first published in 1909. Below, we’ve included an extended version of the original, which ended in 2008. It is based upon the 18.6-year lunar declination cycle. While Gann is best known for his use of geometry and harmonics in the creation of such cycle tools including the Spiral Chart (or Square of Nine), the Hexagon Chart, and the Circle of 360, Gann’s forecasting methods were also based upon inferences drawn from astronomy and astrology. He was a student of the ancient Greek and Egyptian cultures, as well as a great student of the Bible, and he was also a 33rd degree Freemason of the Scottish Rite Order. Gann believed, “Time is more important than price. When time is up, price will reverse.”
Since 1909, based upon the expected outcomes for each period A through K, indicated in the legend to the far right of each row, the table has correctly identified the following: A low in stock prices in 1922 and a high in stock prices in 1929; A major panic and crash in stock prices, along with breadlines and soup kitchens from 1930-32; A high for stock prices in 1946 and a low for stock prices in 1950; A panic in 1962; A high in 1966; A panic and crash in 1968, followed by a low in 1970; A panic in 1976 and a low in 1978; A low for stock prices in 1982; A crash in 1987; A low in 1990; A high in 2000, followed by a panic in 2001-02; A major panic and crash in 2008; An extreme low for stock prices in 2009; A panic in 2015, followed by a low in 2016; A high in 2018; A panic in 2020; And a high in 2022.
Gann’s 18.6-year lunar declination cycle is currently forecasting a major panic and crash by 2026, to be followed by 2-years of falling stock prices, which are then slated for an extreme price low in 2028. Could an adverse SCOTUS ruling on the legality of the Trump administration’s tariffs be the catalyst for a global financial calamity? We don’t know. Have Gann’s forecasts been perfect? Of course not. Gann’s Financial Time Table certainly does not have all the answers, but in our view, when considered in the light of its track record — investors that ignore it, do so at their own peril.
The Benner Cycle
To be sure, Gann was not alone in his fascination with long-term cycles. He was preceded by Samuel Benner, a prosperous American farmer who was wiped out financially by the 1873 panic and a hog cholera epidemic. In retirement, he set out to establish the causes and timing of fluctuations in the economy. In 1875, he published a book entitled, Benner’s Prophecies of Future Ups and Downs in Prices, forecasting commodity prices for the period 1876 to 1904. Many — but not all — of these forecasts were fairly accurate. The Benner Cycle includes:
A (upper line): “Years in which Panics have occurred and will occur again.” A 54-year cycle alternating every 18, 20 and 16 years (similar to the Kondratiev wave).
B (middle line): “Years of Good Times, High Prices and the time to sell Stocks and values of all kinds.” Cycles alternating every 8, 9 and 10 years.
C (lower line): “Years of Hard Times, Low Prices, and a good time to buy Stocks, ‘Corner Lots,’ Goods, etc., and hold till the ‘Boom’ reaches the years of good times; then unload.” A 27-year cycle in pig iron prices with lows every 7, 11, 9 years and peaks in the order 8, 9, 10 years (B - middle line).
The “Periods When to Make Money” chart above is attributed to George Tritch’s Hardware Co. in 1872. The chart follows the Benner Cycle as described in Samuel Benner’s 1875 book, which raises some controversy over its origin — was Benner the architect of this cycle model, or was it actually Tritch’s creation. Benner’s 1875 publication, which expanded on these ideas and tied them to commodity price cycles (e.g., 11-year cycles for corn and pigs, 27-year cycles for pig iron), gained more prominence, possibly overshadowing Tritch’s earlier work. Benner’s focus on solar cycles and planetary influences, added a layer of financial astrology that critics argue lacks empirical rigor. Regardless, its alleged predictive power has closely aligned with events like the Great Depression, the Dot-Com Bubble, and the 2008 GFC, thus keeping it relevant among seasoned investors, despite the skepticism.
The chart’s enduring appeal lies in its simplicity and purely cyclical view of markets, resonating with those seeking patterns in economic chaos, but its reliance on outdated assumptions (e.g., pig iron cycle) and inconsistent accuracy suggest it’s more a historical curiosity than a reliable tool. That being said, the updated and extended version of the model illustrated below called for a major top in 2019, which closely coincided with the February 2020 pre-pandemic high, as well as a major low in 2023, which correlates with the March 2023 Silicon Valley Bank crisis, which marked a higher low preceding the AI boom. The cycle includes 2026 at the “B” line as a year to sell stocks ahead of a decline that is not expected to bottom until 2032.
Kuznets, Juglar, and Kitchin Cycles
Around the same time Tritch and Benner were analyzing commodity prices to identify their cycle, a French statistician by the name of Clement Juglar was analyzing the business cycle in Paris. In 1862, he identified an apparent 7-11 year cycle for fixed capital investment. By the 1920’s, a British businessman and statistician named Joseph Kitchin, whose work overlapped with that of Nikolai Kondratiev’s, began analyzing British and American interest rates. Kitchin found substantial evidence in support of a short, 40-month business cycle, which later proved to range from 3-5 years. Many contemporary cycle analysts have attributed this phenomenon to the 4-year Presidential election cycle in the U.S. In 1930, economist Simon Kuznets identified a 15-25 year cycle that he presumed to be related to municipal infrastructure investment and land development, but ultimately linked to demographics. The so-called Kuznets cycle dovetails well with Howe’s four 20-25 year turnings, Gann’s 18.6-year lunar declination cycle, and Benner’s 27-year pig iron cycle.
The Bradley Model
In 1947, self-proclaimed financial astrologer Donald Bradley published a pamphlet detailing his “Siderograph,” a model based upon the turning aspects of three planetary groups:
Intermediate-Term Trend: Sun, Mercury, Venus, and Mars.
Long-Term Trend: Jupiter, Saturn, Uranus, Neptune, and Pluto.
Declination Factor: Half the algebraic sum of the given declination of Venus and Mars.
Bradley recognized that the changes in these aspects correlated closely to the changes in the trend of the stock market. He did not attempt to explain why, but surmised that it likely had something to do with the effect of gravity on the attitudes of investors. He was close. Detailed studies of the human brain show that the repression of the moon’s gravitational influence can be shown to interact with the forces of human evolution and behavior, and that the force of gravity directly influences the human nervous system.
Montgomery Cycles
Paul Macrae Montgomery began his investment career with Legg Mason in 1971. Montgomery gained fame for creating the “Magazine Cover Indicator” and the “Hemline Indicator,” which were unconventional but insightful measures of stock market psychology. He later published the Universal Economics newsletter, regularly contributed to major financial publications such as The New York Times, Barron’s, and Grant’s Interest Rate Observer, and was often sought for market commentary.
Throughout Montgomery’s 50-year career on Wall Street he became well-known for accurately forecasting dozens of major market tops and bottoms using unorthodox financial theories that focused on human behavior and market cycles, seeing markets as driven by psychological factors rather than purely economic data. One such theory revolved around the lunar “syzygy,” and astronomical term used to describe the alinement between the Sun, the Earth, and the Moon during a conjunction or opposition, and sometimes eclipses. Montgomery reasoned that the powerful effect of a lunar syzygy on tidal forces and women’s menstrual cycles, would likely account for changes in human behavior. Empirical research confirmed his suspicions, thus leading him look for changes in market trends around dates associated with these celestial events — especially around lunar and solar eclipses. These events are now known to some market participants as Montgomery cycle turn-dates.
One important Montgomery cycle turn-date in recent history was February 28th — a rare planetary parade where seven planets were in alignment. The S&P and the Nasdaq both topped on February 19th before declining 21% and 27% respectively. Since this only happens once every 15 years — inline with the Kuznets cycle and the Benner cycle “A” — a miss of just nine days seems inconsequential. The latest Montgomery cycle turn-date was Thursday, December 4th. It was a rare Full Cold Supermoon. It was rare only because it ended a Major Lunar Standstill event. Consistent with Gann’s Financial Time Table, these occur every 18.6-years marking the end of a lunar declination cycle. The last Major Lunar Standstill event ended in 2007, just before the real estate bubble began to unravel leading to the GFC.
Hurst Cycles
James M. Hurst was an aeronautical engineer who applied advanced statistical techniques in the 1960s to identify recurring patterns in financial price movements. His seminal book, The Profit Magic of Stock Transaction Timing, outlined how markets exhibit overlapping cycles of varying lengths—from short-term (days) to long-term (years)—characterized by attributes like cycle length, amplitude (price swing strength), and phase (timing of peaks/troughs).
Hurst’s approach rests on core principles including Harmonics (cycles nest in simple ratios, e.g., a 20-week cycle contains 20-day and 10-day sub-cycles) and Synchronicity (troughs align when possible across cycles). The Hurst Exponent measures trend persistence: values >0.5 indicate trending markets, while values <0.5 suggest mean reversion. Nominal models include cycles like 18-years, 4.5-years, 18-months, 40-weeks, and 20-weeks.
Traders often use Hurst cycles to forecast turning points by projecting cycle markers (e.g., circles and whiskers for future troughs/peaks) and combining them with channel/envelope analysis for high-probability setups. Systematic backtesting validates cycles, emphasizing multi-cycle alignment over isolated signals. As of December 5th, the 18-month cycle is less than a month from its mid-point peak. Based upon the market’s price action relative to its 40-week and 20-week cycle harmonics, it’s possible to conclude that the S&P 500 topped on October 29th in conjunction with a peak in the 20-week cycle harmonic, which would make the 18-month cycle slightly left translated.
Putting it All Together
For those who believe that stocks “only” go up because they follow earnings trends, the existence of meaningful cycles and their influence on the direction of the stock market might be a tough pill to swallow. But throughout the past two centuries, a number of serious academics and market practitioners made a point of studying the cyclical nature of the economy and stock market. On balance, their conclusions confirm the existence of these cycles. Moreover, the track record of many of these cycles correctly and consistently identifying major market tops and bottoms should not be ignored.
Hurst showed how smaller cycles of days to weeks can operate within the boundaries of larger cycles lasting weeks to months, and how these cycles become the building blocks for ever larger cycles lasting years to centuries, as harmonics of one another. He found that these cycles could be quantified and verified using computers and other scientific instruments, such as a spectrometer. Kondratiev, Kuznets, Juglar, and Kitchin each identified recurring cycles of varying durations based upon the observation and study of empirical economic and statistical data. Armstrong and Prechter derived their cycle conclusions by applying esoteric mathematical concepts to time and price series. Gann, Benner, Bradley, and Montgomery founded successful cycle models by recognizing the correlation between key astronomical events and their effects on human social behavior. Howe and Strauss made their bones by studying demographics and how historical patterns recur over generations.
All of these cycle studies have produced noteworthy results across multiple time periods, otherwise they would have been lost to the dust bin. But, none of these cycle studies is perfect on its own. What is of interest, is that many if not all of these cycle studies are pointing to a point in time between now and early 2026 whereby the current cycle (a bull market cycle) is slated to end, and a new cycle (a bear market cycle) is slated to begin.
Howe’s work concludes that we are past the midpoint of a fourth turning and poised to enter the crisis period. The Kondratiev wave appears to be peaking and getting ready to rollover into its Winter season. Armstrong’s Economic Confidence Model is scheduled to peak at its downcycle midpoint in June 2026 and begin a yearlong plunge into mid-2027. The Benner cycle is also poised to top in 2026 before beginning a six year decline into 2032. According to Prechter, the DJIA may have already topped at supercycle degree of trend. If so, the correction that follows will also occur at supercycle degree of trend — a corrective force last witness during the great depression era. Gann’s Financial Time Table calls for a major panic and crash by 2026 followed by an extreme low in 2028. The Full Cold Supermoon on December 4th coincided with the end of a 18.6-year lunar declination cycle. Since the S&P more than quadrupled over the past 18.6-years, we think its fair to say that this cycle most likely marks the end of a long advance. The Bradly Model points down into year-end, while the 40-week cycle appears to have topped slightly ahead of schedule.
Indeed, the weight of the evidence from these cycle studies collectively suggest that there’s a storm coming, the magnitude of which has the potential to reach epic proportions.
Below, we take a deeper dive into the macro factors driving these cycles. We also examine the geopolitical implications of peace in Ukraine versus war in Venezuela. Finally, we present our comprehensive analysis of equity markets, real estate, commodities, currencies, crypto, and rates, then review our “Perfect Portfolio” tactical asset allocation strategy (+27.3% year-to-date through 11/30/25), which details how we believe investors should be positioned today in order not only to survive, but to thrive, during what promises to be a period of sustained volatility in the months immediately ahead.
Let’s begin…
