Market Cycles Analysis: 2025 Rally Historical Patterns and Future Outlook

This analysis is based on a Seeking Alpha report by Knox Ridley published on November 13, 2025, examining historical market cycles and their implications for the current 2025 rally [1]. The article presents a compelling case that despite modern narratives around AI-driven optimism, investor psychology continues to follow historical patterns of exuberance and denial that have characterized markets across generations.

The market analysis occurs during a significant rally period. Over the past 60 trading days (August 21 - November 13, 2025), major indices have demonstrated strong performance [0]:

• S&P 500: +5.59% gain, rising from $6,380.83 to $6,737.49
• NASDAQ Composite: +8.33% gain, from $21,112.52 to $22,870.36
• Dow Jones Industrial: +5.91% gain, from $44,808.21 to $47,457.22
• Russell 2000: +5.49% gain, from $2,258.94 to $2,382.98

However, on November 13, the SPDR S&P 500 ETF (SPY) declined 1.66% to $672.04, with elevated trading volume of 102.57M shares (above the 74.02M average) [0], suggesting some profit-taking or concern at current levels.

The article focuses on two primary market cycles that closely align with 2025’s price action [1]:

1. 26-Year Market Cycle
   : Drawing parallels to 1998’s global crisis patterns, suggesting the current uptrend could extend through December 2025 and into Q1 2026 before encountering a meaningful correction, though likely brief and consolidative within a broader advance.

2. 45-Year Market Cycle
   : Indicating potential for elevated volatility into Q2 2026, with the current advance possibly extending through December leading to a secondary high in mid-January 2026.

Current sector performance reveals concerning rotation patterns that align with cycle theory warnings [0]:

• Outperforming sectors
  : Consumer Defensive (+0.87%), Basic Materials (+0.08%)
• Underperforming sectors
  : Utilities (-3.07%), Consumer Cyclical (-2.87%), Energy (-2.15%), Technology (-1.57%)

This rotation toward defensive sectors may signal investor positioning for potential corrections ahead, consistent with the cycle analysis projections.

Historical data corroborates the cycle projections, showing November has been historically strong for markets [2]:

• S&P 500 has risen 59% of the time since 1927 with average 1% gains
• Technology stocks have been particularly strong, with Nasdaq 100 up 69% of the time in November
• Consumer discretionary sector has led with 80% success rate and 3.14% average gains

This seasonal strength aligns with the cycle theory’s projection of continued advance through December 2025.

The current market environment shows signs of maturity that support cycle-based caution [0]:

• SPY current P/E ratio of 28.38 suggests elevated valuations
• The market has reached 28 record highs in 2025 [3], raising sustainability questions
• Recent defensive sector outperformance may indicate broader market concerns

The article’s central thesis suggests that despite the AI-driven optimism characterizing the 2025 rally, investor psychology mirrors prior generations, following the same patterns of exuberance and denial [1]. This insight is particularly relevant given the current market’s heavy technology sector weighting and AI-focused enthusiasm.

1. Valuation Pressure
   : P/E ratio of 28.38 suggests elevated risk of multiple compression [0]
2. Sector Rotation
   : Recent underperformance of cyclical sectors may signal broader concerns [0]
3. Volume Anomalies
   : Elevated trading volume on down days suggests distribution patterns [0]

Based on the cycle analysis [1]:

• Short-term
  : Potential continued strength through December 2025
• Medium-term
  : Secondary high possibility in mid-January 2026
• Long-term
  : Post-correction opportunities in Q2 2026 following volatility

• S&P 500 holding above key moving averages (20D: $6,790.98, 50D: $6,699.12)
• Technology sector leadership sustainability
• Volume patterns confirming or denying distribution

• Cycle validation through December-January period
• Q1 2026 correction timing and magnitude
• AI sector earnings validation vs. speculative enthusiasm

The analysis reveals that while the 2025 rally has been substantial, historical cycle patterns suggest we may be approaching a period of increased risk. The 26-year and 45-year cycles both project continued strength through December 2025 but warn of meaningful corrections in Q1 2026, with elevated volatility potentially emerging in Q2 2026 [1].

Current market conditions show mixed signals: strong 60-day performance across major indices [0] but concerning sector rotation toward defensive areas and elevated valuations (P/E 28.38) [0]. The recent 1.66% decline in SPY with above-average volume [0] may indicate the beginning of the distribution phase suggested by cycle theory.

Decision-makers should monitor key technical levels, sector leadership changes, and volume patterns while recognizing that cycle analysis, while historically informative, carries inherent limitations including potential structural market changes that could invalidate historical patterns [1].