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The Presidential Cycle Vs 2011 – Which Will Win?

Bespoke Investment Group has been publishing some nice research charts on the correlation between the US stock market today and past cycles.

Last week I went into detail about the Presidential Cycle and what it might mean for investors this year. (see The Presidential Cycle - How To Take Advantage In Your Portfolio)

The US stock market has traded inline with what one would expect when compared to the historic correlation:

Source: Bespoke Investment Group

However, the markets are also trading in a similar pattern to that of last year:

Source: Bespoke Investment Group

So which is correct? Unless someone has a magic crystal ball that I can borrow, only time will tell. But I do tend to lean towards correlations with more historic data points…