A quién sirve esta entrada — For anyone who wants to know where a stock stands before deciding what to do with it. The four-phase cycle is the method's macro map: it places price and volume in one of the four seasons of the institutional campaign and shows when it makes sense to seek longs, shorts, or stay out.
Fuente: the classic sequence of the Stock Market Institute, taken up by Wyckoff Analytics. Aligned in Cyclepedia with Market cycle in volumetric terms: the Wyckoff phases depend on the supply/demand balance, not on fixed temporal periods as in Hurst's cyclic analysis.
Prerrequisitos
Composite Man, Three laws. Operational path starting here: Five steps.
A campaign cycle, not a calendar
The difference to grasp at once is that the four phases are not a clock but the story of a campaign. The Composite Man does not buy or sell in an instant: he builds the position sideways (accumulation), carries it to profit by letting price rise (markup), unloads it gradually to late buyers (distribution), and finally lets the abandoned price collapse (markdown). The duration of each phase is variable and depends on how much material must change hands, not on a number of sessions. This is why the Wyckoff method answers the question «who is in control and with how much volume» and should be read as complementary — not alternative — to the analysis that answers «when does the cycle return in time».
| # | Phase | Structure | What the Composite Man does |
|---|---|---|---|
| 1 | Accumulation | Range after downtrend | Buys quietly, absorbing supply |
| 2 | Markup | Uptrend | Lets it run; adds on LPS |
| 3 | Distribution | Range after uptrend | Sells to late buyers |
| 4 | Markdown | Downtrend | Has already sold; price collapses |
In plain terms — First they buy low, then the stock rises, then they sell high, then it falls. The same sequence repeats at different scales — the individual stock, the sector, the index — and the phases nest one inside another.
Accumulation and markup: the bullish half
Accumulation is the range that forms after a mature downtrend, when the decline loses force and the first signs of demand appear: preliminary support, a selling climax, the automatic rally that delimits its resistance, the secondary test on reduced volume. This is where cause is built and, often but not always, where the spring occurs in phase C as a final test of residual supply. The ideal long timing is not the start of the range but its final part — phase C–D — when the nine buying tests confirm that supply is exhausted.
The markup is the effect that releases that cause: an uptrend of rising highs and lows, with shallow pullbacks that draw the subsequent Last Points of Support. The transition signal is the Sign of Strength that breaks the range resistance — what Robert Evans (SMI) described as the Jump Across the Creek (JAC), the jump over the stream formed by the line of internal highs. After the jump, the return to the edge (back-up to the edge of the creek) is precisely the LPS that offers the lower-risk entry.
Ejemplo — The range breakout happens on a wide-range SOS bar, volume at 2× the average, and a close on the highs: this is the JAC. The following correction happens on half the volume, with an LPS resting on the former resistance now turned support (S/R flip): the markup is healthy and the cause can unfold.
Detail: Accumulation phases A–E.
Distribution and markdown: the bearish half
Distribution is the mirror portrait at the top of the market. After a mature uptrend, demand begins to saturate: preliminary supply, a buying climax often on excellent news, the automatic reaction, the secondary test. In phase C the UTAD frequently appears, the false breakout that traps buyers. The short timing sits in phase C–D, when the nine selling tests confirm that demand no longer holds the new highs and the first Signs of Weakness appear.
The markdown releases the bearish cause: weak rallies on volume that tends to grow on the declines, with subsequent Last Points of Supply offering short-add zones. The markdown ends when the first signs of a new accumulation appear — and the cycle restarts, often at an entirely different price level.
Detail: Distribution phases A–E.
Change of character: the hinges between phases
Phase transitions are not sudden: they have a recognisable signature that the method calls change of character. The first crack in an uptrend is the buying climax + automatic reaction pair: for the first time a decline is wider and faster than the uptrend had accustomed you to see. In the same way, the bottom of a downtrend announces itself with selling climax + automatic rally, when a bounce becomes unusually energetic. Learning to recognise these character changes — the reaction that «weighs» more than the rally at the top, the rally that weighs more than the reaction at the bottom — is what lets you anticipate the transition between phases without waiting for the late confirmation of the breakout.
Frequent mistake — Treating every bounce or every congestion as the start of a new phase. The Composite Man's campaign is already under way inside the range: the trader seeks harmony with that campaign in the C–D zone, not arbitrary anticipation on every oscillation. A range at the top of the market that «looks like» reaccumulation is often distribution — context decides, not the drawing.
Operational timing by phase
| Objective | Cycle zone | Condition |
|---|---|---|
| Long | End of accumulation / start of markup | Nine buying tests + favourable market (step 1) |
| Add | Markup on LPS | Low-volume pullback above the range |
| Short | End of distribution / start of markdown | Nine selling tests + weak market |
| Stand aside | Middle of the range, phase B | Cause under construction, mixed signals |
Full workflow: Five Wyckoff steps.
Wyckoff and Hurst, complementary
| Wyckoff | Hurst | |
|---|---|---|
| Question it answers | Who is buying/selling and with how much volume? | When does the cycle return in time? |
| Tool | Volume, trading range, phases A–E | FLD, VTL, nominal cycles |
| Nature of timing | Institutional campaign (cause/effect) | Periodic temporal synchronisation |
The two disciplines live in separate hubs precisely because they answer different questions: tradizione-wyckoff and tradizione-hurst. Confirming a cyclic high with a volumetric buying climax is an example of a useful bridge between the two readings, without confusing them.
Summary card
| Phase | Type | Typical trader action |
|---|---|---|
| Accumulation | Range (cause) | Prepare long, measure the count |
| Markup | Uptrend (effect) | Hold; add on LPS |
| Distribution | Range (cause) | Prepare short, exit longs |
| Markdown | Downtrend (effect) | Short or cash |