2025 (Wood) Snake: A Year of Renewal & Agility?

By Ron William, CFTe, MSTA

2025 (Wood) Snake: A Year of Renewal & Agility?

As starts go, this year has been unsurprisingly weak, with SPX still capped near its all-time high. What next? The January barometer (JB) seasonality pattern for 2025 will be either of two scenarios: best-case, an extended linear uptrend (+/+), or worst, a volatile cycle and negative surprise into year-end (+/-), as illustrated within the JB scenario matrix in my previous FSC vlog.

However, in Asia, where I used to live, a collective population of nearly 2 billion recently celebrated their New Year by saying “gōngxǐ fācái,” an expression that wishes “health and prosperity.” One thematic question to ask is what will the 2025 (Wood) Snake Year likely bring? For those less familiar with this ancient timing system, also known as the Lunar New Year, it begins on the second new Moon after the winter solstice. Moreover, it is a lunisolar calendar, based on astronomical observations of the Sun’s position in the sky and the Moon’s phases.

Traditional Chinese zodiac use archetypal animal symbols to describe the qualitative nature of each lunar year cycle of 12 years. A matrix of five elements is further overlayed; (Earth, Wood, Water, Fire & Metal), so that each year only rotates once in a lifetime, every 60 years – also known as the Chinese sexagenary cycle.

Last year I wrote about the 21.5% jump in the SPX associated with the “Wood Dragon.” Figure 1 illustrates the updated heatmap of U.S. equity market returns over the last 100 years. Empirical analysis shows the highest returns in the Year of the Rabbit, with third highest attributed to Dragon and lowest to the Horse (Figure 2).

Find more in-depth academic studies here. The last Wood Snake year appeared in 1965, when there was an 11% gain in SPX. However, outlier negative returns still happen, typically across the metal element, during 2001 and 1941. Another example is in earth element during 1929. See CLSA analysis for recent examples.

Of most interest is the latter period remembered for what led to the Wall Street crash. This merely serves as a historical risk analogue that overlays with eastern cyclical matrix. It implies caution and potential event risk ahead. This remains in line with my view, warning of a major peak in equities, weighed by triple whammy of headwinds, notably momentum extremes, rotation fragility, and cycle asymmetric risk, particularly into the month of March.

Long term our Kondratieff wave analysis suggests an inflation resurgence into H2 2025 that should offer further disruption. Naysayers of this eastern calendar system should temporarily suspend their disbelief and simply reflect on these analogues as potential risk scenarios, especially given that SPX continues to signal a trend exhaustion (wave 5) that is still in play (Figure 3). On a final note, in Chinese feng shui, the Snake signifies a year of renewal and agility. Although this also requires a robust and adaptive strategy. “Gōngxǐ fācái!”

Thank you to all FSC Members for all your kind feedback and insightful questions on our FSC blog series. I welcome more interaction at ron.william@cycles.org

Ron William, CFTe, MSTA

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Ron William, CFTe, MSTA, is a market strategist and educator/mentor with more than 20 years of experience working for leading macro research and institutional firms, producing tactical research and trading strategies. He specializes in global, multi-asset, top-down framework, grounded in behavioural technical analysis, driven by cycles based on the "Roadmap" signature model of veteran market technician Robin Griffiths, published in his book “Mapping the Markets.”

Ron also applies a "market & mind" approach at IntensiChi, using the latest techniques in behavioral-risk models and neuroscience sourced from expert groups. He further supplements with mentoring/coaching, trained by the International Coaching Federation (ICF), and teaches a regulatory approved masterclass in Applied Behavioral Science, with investment, private banks and CFA Societies.

Ron's primary work, as part of his current institutional market advisory firm (RWA), acquired global industry recognition as winner of “Best FX Research” in 2020. Financial media programs and industry publications regularly feature his market insights, including “Is the big cycle about to turn?”, predicting the 2020 crash and alerting the “Minsky paradigm” of 2020 H2-2022.

Driven by high-integrity education, Ron serves as part of the education committee of the International Federation of Technical Analysts (IFTA), Development Director at the Foundation of the Study of Cycles (FSC), Head of SAMT’s Geneva Chapter, and an honorary member of ESTA. He is also a visiting lecturer at universities, active guest speaker for the CFA, CAIA and CISI, and senior teacher at colleges offering an accredited diploma in trading and investing.

NOTE: This article is intended exclusively to provide information and education to help individuals better understand cycles and the markets. However, this information is not to be construed as professional advice as to the buying and selling of securities or other investment instruments. In no event does the host express any opinion with respect to, or make recommendations regarding, the purchase or sale of any particular security or other investment instrument. There is a very high degree of risk involved in trading securities, and buying or selling decisions are solely within the personal discretion of each individual.