The Big Picture: Cyclical Bear Within a Secular Bull

Where does the market stand now? It may depend on your timeframe. That’s because markets tend to move in cycles. But no cycle moves in a straight line. A long-term cycle may be considered secular. But shorter moves may be considered cyclical.

Markets may have moved higher in the past few weeks. But they haven’t broken their downtrend. While this cycle will end in time, over a longer timeframe, markets may head higher.

This would be the secular bull market. Given that stocks generally rise most of the time, long-term bullish investors may have the last laugh.

A secular cycle is a big part of the economy. But a cyclical move may be more short-term. The post-World War II market rally higher was a secular cycle driven by new spending and investments at home. That move lasted for decades.

Right now, we may be in a secular bull market that started in 2013. That’s when markets moved past their pre-Great Recession highs. The current volatile market may simply be a cyclical move driven by the pandemic and its after effects.

If true, such a move should end in time, with the longer-term secular bull market taking over. Investors who can recognize where we are in those two cycles can best profit from getting the big moves right in the year ahead.

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