Cyclical-Secular Moving-Average Map
Separate market corrections from structural regime changes
- Difficulty
- Easy
- Time to result
- ~days to results
- Steps
- 6
- Confidence
- 99%
This map assigns different jobs to two weekly moving averages. The 40-week average, roughly analogous to the 200-day average, represents the cyclical market trend. The 200-week average represents the secular trend. Their slopes produce two separate labels, allowing a market to be in a cyclical correction while retaining a secular bull structure. Price moving below the 40-week average can therefore indicate a correction without proving that the long-term regime has ended, especially while both averages continue rising. The framework's output is a regime classification rather than a point forecast, helping investors calibrate risk, time horizon, and expectations without treating every drawdown as a new secular bear market.
Origin
Stephen Suttmeier described the 40-week and 200-week chart as the recurring market-regime graphic he uses in television appearances for BofA Securities.
Core principles
- 01Separate cyclical movement from secular structure.
- 02Use objective trend measures before applying market labels.
- 03Treat price breaks differently from moving-average reversals.
- 04Update the regime when the underlying averages change direction.
How to run it
- 1
Plot Weekly Prices
Display the broad market index using weekly observations to keep the classification focused on durable trends.
Pro tip Use a representative benchmark such as the S&P 500 for the primary regime call.
Watch out A narrow or atypical index may not represent the investor's actual market exposure.
- 2
Measure the Cyclical Trend
Add the 40-week moving average and record whether it is rising, flat, or falling.
Pro tip Treat it as the weekly counterpart of the widely followed 200-day average.
Watch out Price crossing the average is not the same as the average reversing direction.
- 3
Measure the Secular Trend
Add the 200-week moving average and inspect its direction to identify the long-term structure.
Pro tip Give its slope more weight than a brief test by price.
Watch out The secular measure is intentionally slow and will not provide early tactical timing.
- 4
Build the Two-Level Label
Classify the cyclical and secular regimes independently based on the two slopes.
Pro tip State both labels explicitly, such as cyclical correction within a secular uptrend.
Watch out Collapsing both horizons into one bull-or-bear label destroys useful information.
- 5
Interpret the Pullback
If price falls below the 40-week average while both averages rise, treat the move as a correction until stronger contrary evidence appears.
Pro tip Look for stabilization around major weekly support.
Watch out Do not ignore a sustained deterioration merely because the secular label changes slowly.
- 6
Reassess Continuously
Update the classification as price and the slopes evolve rather than defending a fixed forecast.
Pro tip Predefine which slope changes would alter the regime.
Watch out Historical analogues should inform the call, not override current evidence.
In the wild
The S&P 500 fell below its 40-week average during a roughly 10 percent correction, but both its 40-week and 200-week averages were still rising. The framework classified the environment as a correction within cyclical and secular uptrends rather than an established secular bear market.
→ The pullback was contextualized without discarding the longer-term bull structure.
Suttmeier characterized the 2022 decline as a cyclical correction inside a secular bull market and compared its tests of long weekly averages with prior corrections in 2012, 2016, 2019, and 2020.
→ The long-term regime remained distinct from the severe short-term decline.
Common mistakes
Equating Price and Slope
A market can trade below a rising average before the average itself turns down.
Using One Label for Two Horizons
Calling the market simply bullish or bearish hides whether the cyclical and secular trends disagree.
Turning Classification Into Prediction
The map describes the current regime; it does not guarantee when a correction will end.
Is it for you?
Best for
It is best for investors making market-regime and strategic allocation decisions on multi-month or multi-year horizons.
Not ideal for
It is not ideal for selecting precise trade entries or forecasting the magnitude of the next market move.
From the transcript
“we gauge the cyclical trend of the market using the forty week moving average, and we gauge the secular trend as the two hundred week…”
“the pattern is a cyclical uptrend or bowl market, and a secular uptrender bowl market.”
“it is a correction of that pattern.”
From the episode
Stephen Suttmeier on Chart Portfolio of Global Markets
Stephen Suttmeier