Tracking Market Cycles for Global Investors and Traders

The Kitchin Cycle (aka Business Cycle)

The Kitchin Cycles

Harvard’s Joseph Schumpeter concluded that every long wave was made up of 18 smaller business cycles or Kitchin cycles. In more recent years, with more sophisticated charting technology and market analysis, the research conclusions of market analyst P.Q. Wall, that the long wave is make up of only 16 market cycles, has been validated. This is an essential distinction in cycle research.

Market cycles differ from business cycles in that they are identified on an index chart, and not necessarily in the economic data as a business cycle. However, they often correlate to the regular business or trade cycle. Every long wave appears to be made up of 16 market “Kitchin” cycles. The 16 Kitchin cycles that make up a long wave are ideally 42 months in length, but they are rarely ideal and fluctuate in length both short and long, often in Fibonacci ratios of their ideal length in time.