A market cycle is the recurring pattern of expansion, peak, contraction and trough that characterises commodity prices, economic activity and the stocks linked to them. Understanding market cycles is the foundation of cyclical investing: the ability to identify where we are in a cycle — and therefore which phase is coming next — is what separates cycle investors from buy-and-hold investors who ride every boom and bust with equal passivity.
The Four Phases of a Market Cycle
| Phase | Characteristics | Signal reading | Cyclical stocks |
|---|---|---|---|
| Trough (BUY zone) | Commodity prices at lows, sentiment negative, supply shrinking | BDI below 1,000, Brent below $50, copper below $7,000 | 🟢 Best time to buy |
| Early recovery | Demand recovering, supply still tight, prices rising | PMI rising above 50, commodity prices lifting | 🟢 Continue holding |
| Peak (SELL zone) | Commodity prices elevated, new capacity flooding in, sentiment euphoric | Brent above $90, copper above $9,500, gold above $2,500 | 🔴 Exit positions |
| Contraction | Demand falling, oversupply building, prices collapsing | PMI falling below 50, commodity sell-off | 🔴 Avoid or short |
Why Cycles Repeat
Market cycles in commodities and the stocks linked to them repeat for a simple reason: the time lag between a price signal and the supply response. When commodity prices fall to distressed levels (the trough), producers cut investment in new capacity. This takes 3–7 years to fully remove supply from the market. When demand eventually recovers and prices rise, there is insufficient new supply to meet demand — causing prices to overshoot to the upside. High prices then incentivise massive new investment, which comes online 3–7 years later and creates the next oversupply period.
This is why the same signals have triggered the same outcomes across multiple decades: the structural time lags in mining, oil production and shipbuilding create a mechanical cycle that repeats regardless of the specific geopolitical or economic trigger for any given trough.
Commodity Supercycles vs. Regular Cycles
A supercycle is a multi-decade period of broadly rising commodity prices, driven by a structural shift in demand that takes many years for supply to catch up with. The most recent commodity supercycle (2000–2014) was driven by China’s industrialisation: as China built its infrastructure, cities and manufacturing base, demand for steel, copper, coal and oil rose far faster than global supply could respond. Within this supercycle, there were still regular cycle fluctuations — including the severe 2008–2009 GFC trough — but the underlying trend was upward.
The current debate among commodity investors is whether a new supercycle is beginning, driven by the energy transition (copper, lithium, cobalt, nickel for EV batteries and renewable energy infrastructure) and defence rearmament (steel, ammunition, armoured vehicles). The Signycle framework treats this as a long-term backdrop while still using the BUY/SELL signals to identify entry and exit points within individual cycles.
The Signycle Cycle Dashboard: How to Identify the Current Phase
Signycle tracks 18 macro signals to identify the current cycle phase. The signals fall into four categories:
Energy signals: Brent crude, VLCC tanker rates, LNG prices, oil services rig utilisation. Currently all in SELL territory (Brent $108, VLCC $294k/day).
Industrial metal signals: LME copper, iron ore, aluminium, steel (HRC). Currently in SELL to NEUTRAL territory (copper $12,043/t = DEEP SELL).
Shipping signals: Baltic Dry Index, SCFI container rates, PCTC car carrier rates. Currently NEUTRAL (BDI 2,014 pts).
Macro signals: Global PMI, yield curve, leading economic indicators, recession probability. Currently showing late-cycle/pre-recession: PMI 51.4, recession probability 54%.
The composite picture in March 2026: most signals in SELL territory, recession probability elevated, cycle score 81/100. This is classic late-cycle positioning — not the time to be buying cyclicals, but the time to be watching for the next trough that will set up the next BUY opportunity.
See the current cycle dashboard
Signycle tracks 18 signals in real time. Know which phase we are in and when the next BUY opportunity is approaching.
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