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Jeff Clark encourages investors to consider whether these volatile markets represent a buying opportunity

Forget about the panic. Forget about the gut-wrenching, portfolio-busting decline last week and in recent days. We believe now may be the time to buy stocks you like for the long-term.
I know it seems like an outrageous outlook – especially coming from someone who has preached caution for most of the year. But the market's recent decline may be more than just a buying opportunity. What if this is Christmas in August for stock buyers? We believe recent declines may well have set up the potential for double-digit gains through year's end.
Let me explain... 
You see, 2011 is the third year of a presidential cycle. According to numbers put together by my friend Steve Sjuggerud,  stocks have gone up every third year of a presidential cycle since 1940. Even more strikingly, his numbers suggest the average increase each year is 22%.
The theory is, stocks go up in anticipation of Big Government stimulating the economy as we head into the election year. Whether you agree with the premise or not, Steve's statistics back up the theory. Seven decades of data tell us stocks go up in the third year of a presidential cycle. Even in 1987 – the year of the big crash – stocks closed higher on the year. Obviously, there's no guarantee of this trend continuing in future, but it's very possible.
As you may recall, we kicked off 2011 to plenty of talking heads cheering about how this would be a wonderful year for stocks because it was the third year of a presidential cycle.  I even conceded stocks would close higher on December 31, 2011 than they did on January 1, 2011 – though I was worried about what they might do in between.
Of course, no one is talking about the theory now... just about how everyone has turned bearish. If you count yourself among the contrarians, as I do, this may be the right time to buy.
Think about this. If stocks follow the historic pattern and close up on the year by just 1%, that's a 9% gain over the next five months. If stocks eke out the meager 4% gain they achieved during the 1987 crash year, that's a 13% return from current levels.
But if stocks can generate the average 22% return during the third year of a presidential cycle... well then, like I said... it could possibly be Christmas in August.
Again, statistics aren't ironclad guarantees - but they do suggest probabilities worth taking seriously. I've been cautious to bearish for most of the year. But I'm bullish now, and betting on potential big gains through the end of the year.
Best regards and good trading,
Jeff Clark
Growth Stock Wire
TradeKing All-Star Commentator

Editor's note: Veteran trader Jeff Clark is author of Growth Stock Wire, a daily read providing investors with a pre-market briefing on opportunities in the global stock, currency, and commodity markets.  Click here for more information… and a free report designed to hone your trading strategies.

Jeff Clark / Growth Stock Wire holds no positions in any securities mentioned in this post.

All investments involve risk, losses may exceed the principal invested, and the past performance of a security, industry, sector, market, or financial product does not guarantee future results or returns. TradeKing provides self-directed investors with discount brokerage services, and does not make recommendations or offer investment, financial, legal or tax advice. You alone are responsible for evaluating the merits and risks associated with the use of TradeKing's systems, services or products.

TradeKing selects and defines as All-Stars certain independent market commentators who are recognized industry personalities and experienced traders and who provide timely market commentary via the TradeKing All-Star blog at Each All-Star commentator’s bio, related qualifications and disclosure as to their relationship with TradeKing can be found on the All-Star blog roster, available at The selection of All-Stars commentators is solely based on the quality and style of the content provided. TradeKing does not measure, endorse, or monitor the performance or correctness of any statement or recommendation made by independent All-Stars commentators on Supporting documentation for any claims made in this post will be supplied upon request by the author of the post, Jeff Clark, who is solely responsible for the views expressed here. Send a private message to All-Stars using the link below the profile image.

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