Zen Trading Strategies and Market Cycles: Waiting for Alignment Before Acting
- Mar 26
- 6 min read
In volatile markets, traders often feel pressured to act quickly. But Steve’s philosophy emphasizes something different — a more disciplined, thoughtful approach that favors cycle alignment over impulsive decisions. This is where the concept of Zen trading strategies truly shines. Not in the mystical sense, but in the calm, focused mindset that guides traders to act only when market conditions are in their favor.
Right now, the market is offering a textbook example of why patience pays. While the intermediate cycle has been rising since mid-March, the long-term cycle continues to decline — and that divergence is the exact reason why traders should resist over-committing.
Why Cycle Alignment Matters
Market cycles come in different time-frames, but the power lies in how they interact. Steve focuses primarily on the long-term cycle (3–6 months) and the intermediate cycle (4–6 weeks). When both are moving in the same direction, that alignment offers high-probability setups. But when they are out of sync, the market becomes unstable.
Right now, we are in such a phase: the intermediate cycle is climbing, while the long-term cycle is still falling. This creates a market environment that looks bullish on the surface — but is fundamentally weak underneath. Short-covering and reactive moves dominate, while sustained institutional buying remains absent.
Cycle alignment, then, acts as a filter. It helps traders identify which setups have strength behind them and which are likely to fizzle out. Without that alignment, even technically sound trades can fail.
Short-term rallies without institutional support tend to be brief and prone to reversal — especially during cycle divergence. These moves may appear promising but often lack the volume, structure, and participation needed for sustained follow-through. This is why Steve emphasizes recognizing the difference between reactive price action and structural advances.
Check our post on Institutional Buyers vs. Short Covering: What Today’s Price Action Is Really Telling Us for more info.
True alignment signals a shift in the underlying market environment, giving trades a higher chance of lasting follow-through. When both cycles are rising, it’s a sign that institutional buyers are more likely to participate, and traders can take more confident, longer-duration positions.
Zen Trading: The Power of Stillness in Divergence
Zen trading isn’t about doing nothing. It’s about doing the right thing at the right time — and sometimes, that means waiting.
Steve often says: “Let the cycles lead — and wait for confirmation before committing.” That mindset is at the core of Zen trading. When long-term and intermediate cycles are not aligned, the market is not offering clarity. The smart move is to step back, observe, and wait for signs that a real opportunity is forming.
This doesn’t mean we stop trading altogether. But it means we:
Reduce position sizes
Set tighter stops
Avoid emotionally driven trades
Stay focused on key cycle windows and projected highs/lows
Watch how price reacts around crossover averages and channel boundaries
By remaining neutral during cycle divergence, traders avoid false confidence and conserve capital. This mindset creates consistency over time, especially when most market participants are chasing headlines or reacting emotionally to every price swing.
As we approach the projected March 31 top, Visualizer data continues to suggest a pullback heading into early May. Until that plays out — and we see signs of a new intermediate low forming alongside a stabilizing long-term cycle — traders should remain cautious and intentional.
The 2023 Template: A Lesson in Cycle Alignment
A nearly identical situation unfolded in late 2023. The intermediate cycle bottomed in late September, but the long-term cycle was still in decline. That early rally attempt stalled. It wasn’t until a second intermediate low in late October, aligned with a flattening long-term cycle, that a five-month rally took hold.
During the first rally attempt, price failed to hold gains and rolled over quickly — a typical result when long-term cycles are falling. The second attempt, by contrast, gained traction as cycle alignment returned. Institutional participation increased, leading to sustained momentum and clearer leadership across sectors.
That pattern is exactly what we’re watching for again. Not just a bounce — but confirmation. Alignment between the long-term and intermediate cycle is what gives us staying power, volume, and follow-through. Anything before that is just noise.
Questions About Zen Trading and Cycle Timing
What does “Zen trading” mean in a cycle-based strategy?
Zen trading means acting only when the conditions are right, not reacting out of fear or excitement. In Steve’s system, it reflects a mindset that values clarity and structure over noise and speed. A Zen trader isn’t passive — they are observant. When long-term and intermediate cycles align, they act decisively. Until then, they remain centered, watching for confirmation.
This mindset encourages patience, discipline, and risk control — the very foundations of consistent success in trading. It's about developing comfort with waiting and removing the emotional pressure to always be in a trade.
Why is it risky to trade during cycle divergence?
When cycles are out of sync, the market is sending mixed messages. You may see bullish price action from a rising intermediate cycle, but if the long-term cycle is still falling, the move is likely to be shallow or short-lived. These are environments prone to head fakes and failed breakouts.
Cycle divergence increases the odds of whipsaw moves, where a seemingly strong rally quickly reverses. Traders operating in these conditions are often whipsawed out of positions or caught overexposed when the trend resumes downward. The risk is not just loss, but also loss of confidence and discipline.
How do you know when cycles are aligned?
Cycle alignment is identified by watching the behavior of both cycles in relation to projected turning points, crossover averages, and price channels. Steve’s Visualizer tool shows expected cycle highs and lows and helps spot when intermediate and long-term cycles are turning higher together.
Additionally, you’ll often see supportive price behavior during alignment:
Higher lows forming on key indices
Breakouts above price channel midlines
Sustained volume increases
Broader participation across sectors
When both cycles are pointing higher and confirmed by price structure, alignment is underway — and it’s time to get more active.
Should traders completely avoid the market during divergence?
Not necessarily — but they should shift their mindset and strategy. Instead of looking for trending opportunities, consider short-term, tactical trades with defined exits. Lower your exposure, tighten your stops, and limit your expectations.
It’s not about exiting the market entirely — it’s about scaling back your commitment until probabilities improve. Zen trading accepts that waiting is a position, and that doing less can sometimes protect more.
What are signs that cycle alignment is approaching?
Several signs suggest that the market may be nearing alignment:
The intermediate cycle reaches a projected low and begins to turn up again
The long-term cycle begins to flatten, signaling it may be bottoming soon
Prices stop making lower lows and begin forming higher lows
Participation widens — not just tech or defensive sectors, but a broad advance
Price breaks out of a consolidation range or above the 10-day channel mid-line
These are early signals to monitor, but confirmation requires patience. When they align with projected cycle timing, the edge becomes clear.
Resolution to the Problem
Too many traders chase every bounce or headline. But Steve’s philosophy teaches something different: wait for alignment. Right now, the market is offering movement without commitment. The divergence between intermediate and long-term cycles makes it a dangerous time to go all-in.
The solution is to trade with intention. Observe, assess, and only act when the cycles offer clarity. That’s how consistent results are built — not through force, but through timing. Zen trading embraces the idea that what you don’t trade can be just as important as what you do.
Join Market Turning Points
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Conclusion
Zen trading strategies are not about being passive — they’re about being precise. Right now, the cycles say “wait.” And that patience will be rewarded once alignment returns. Let the cycles lead. Wait for the signal. And then act with confidence.
Author, Steve Swanson