By Jonathan Burton

MarketWatch

SAN FRANCISCO

The third time's a charm, as the saying goes, and 2011 offers a trio of financial-market milestones. It's the crucial third year of the "presidential cycle," the beginning of the third year of the bull market that started in March 2009--all 10 bull markets since 1949 have celebrated their third birthdays--and, in June, the start of the third year of agonizingly slow but still positive U.S. economic growth.

"It's going to be either a good year or a great year," said Sam Stovall, chief investment strategist at Standard & Poor's Equity Research.

That said, investors should never expect smooth sailing, especially now with so much doubt and disbelief surrounding the economic courses being set in Washington and Europe.

S&P's Global Investment Policy Committee cautioned in a recent report that "the very strong performances that are typically experienced" in U.S. markets during these third years "will likely be moderated by the aging of this bull market and the sluggishness of this economic recovery."

The group's latest forecast puts the S&P 500 stock-index at 1,315 a year from now, less than 5 percent higher than its close of 1,256.77 on Dec. 23.

As signs point to investors taking more risk and moving back into stocks, the tea leaves for 2011 suggest that bulls will have more room to run, especially those in U.S. cyclicals. Plus, while small- and mid-cap stocks have strong support, large-caps could enjoy a larger share of the spotlight. As always, buyers will have to tread carefully, particularly bond investors.

Against this multihued backdrop, here are a few ways to position your portfolio through 2011:

The presidential cycle is a four-year U.S. stock-market pattern with surprising consistency, regardless of the president or the party in office. This next year is the cycle's crucial third year, after the midterm U.S. elections and prior to the general election, which bodes well for the broad market.

Economically sensitive companies were the U.S. market's strongest in 2010, and their momentum will likely continue. These businesses shine in the earlier stages of an economic expansion as corporate and infrastructure spending rises.

Materials stocks, focused around chemicals, industrial gases, fertilizer, containers and paper products, are tied to commodity prices and, by extension, emerging-markets growth.

Accordingly, U.S.-based materials companies are exposed to the fastest-developing areas of the world, and to sharp downside risk should commodity prices tumble. Strong demand from developing countries, coupled with the improved financial health of developed economies and rising global stock markets, should underpin oil, metals and other commodity prices, according to Moody's Analytics.

Expectations for the technology sector are highly favorable, with 80 percent of money managers bullish on the business, according to a recent Russell Investments survey. While some might see that as a screaming "sell" signal, global business investment in computer, software and communications equipment is higher, and consumers' love affair with tech gadgets continues unabated.