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Program Trading and the Super Bowl 2011
Myth versus reality and currently under further review and being updated

Information below is for 2011, not 2012.

For years there has been an accepted belief that the outcome of the Super Bowl can be used as a predictor for the stock market.  This concept was essentially rooted in the belief that if the Super Bowl winner was a team from the old AFL (American Football League) that would result in a bearish trend in the stock market the remainder of the year.  

While investors debate this idea, there are program trading facts that are of more interest to  traders.   So rather than focus on the remainder of the year, we simply took a look at Fridays prior to the Super Bowl and then the week after the Super Bowl.  However while it might bring about some amusing conversation to debate the effect of the Super Bowl on the stock market, we would not advise betting the farm on only one indicator.

1.  Since the very first Super Bowl back in 1967, any Friday prior to any Super Bowl Sunday has seen the Dow close negative 53% of the time.  More recently within the past ten years, these Fridays have seen the Dow close negative 70% of the time.  

2.  Since 1967, any Mondays after any Super Bowl Sundays have seen the Dow close negative 55.8% of the time.   More recently within the past ten years, these Mondays have seen the Dow close negative 60% of the time.

3.  Since 1967, whenever the Fridays immediately prior to Super Bowl Sundays have seen the Dow post negative closes, the ensuing Mondays after the Super Bowl have seen the Dow close negative 69.5% of the time.

4.  Since 1967, whenever the Fridays immediately prior to Super Bowl Sundays have seen the Dow post positive closes, the ensuing Mondays after the Super Bowl have seen the Dow close positive 60% of the time.

5.  In even numbered years (as currently, i.e. 2010), whenever the Dow has closed negative on the Fridays prior to the Super Bowl, the ensuing Mondays have seen the Dow close negative 63.6% of the time. 

6.  In even numbered years (as currently, i.e. 2010), whenever the Dow has closed positive on the Fridays prior to the Super Bowl,  the ensuing Mondays have seen the Dow close positive 70% of the time.

7.  In even numbered years, whenever the Dow has closed negative on the Fridays prior to the Super Bowl, the AFC has won the Super Bowl 55% of the time.

8.  In even numbered years, whenever the Dow has closed positive on the Fridays prior to the Super Bowl, the NFC has won the Super Bowl 70% of the time. 

And in 2010, the Friday before the Super Bowl closed positive.  And the NFC team, New Orleans,  won the Super Bowl on Sunday.

9.  However, reality is that of all prior 43 Super Bowls, the NFC has won 22 times while the AFC has won 21 times.  Of all prior 43 Super Bowls, the Mondays afterward have closed negative 53% (23 of 43) of the time. 

10.  Furthermore, despite popular media hype, the facts are that since 1967 whenever the AFC has won the Super Bowl, the Mondays afterward have closed negative 52% of the time.  BUT, whenever the NFC has won the Super Bowl, the Mondays afterward have closed negative 54.5% of the time. Therefore, the statistics on Mondays afterward certainly are not what the media would have us believe.  

Program Trading Pattern Recognition
From another perspective, we checked the Dow's performance before and after Super Bowl Sundays as it relates to some of our proprietary pattern recognition indicators. To make this simple for those of you unfamiliar with some of our indicators, suffice it say that one of the things we do is label trading days by certain colors, like red or green or blue.  None of the colors we use as labels have anything to do with denoting market direction.  For example, "red" days are not necessarily negative.  And "green" days are not necessarily positive.   At any rate, don't be concerned that you don't understand our color labeling system for pattern recognition.   That is not necessary to understand the facts utilizing it.

Since 1967 there have only been eight precedents in which any Super Bowl Sundays have been preceded by what we term  "green" Fridays.  This pattern occurred in 1979, 1980, 1993, 1994, 1995, 1996, 1997, 1998.  In these particular eight years, the weeks immediately after the Super Bowl began with "yellow" Mondays.  

Now the interesting part about these particular Fridays and Mondays and the more predictable trading days these particular weeks immediately after the Super Bowl:
1.  In these eight patterns, the green Fridays prior to the Super Bowl have seen the Dow closes split 50/50.  
2.  In these eight patterns, the yellow Mondays after the Super Bowl have seen the Dow closes positive 66.6% (6 of 8) of the time.
3.  In these eight patterns, the green Tuesdays after the Super Bowl have seen the Dow closes split 50/50.
4.  In these eight patterns, the red Wednesdays after the Super Bowl have seen the Dow closes positive 87.5% (7 of 8) of the time.
5.  In these eight patterns, the blue Thursdays after the Super Bowl have seen the Dow closes again positive 87.5% (7 of 8) of the time.
6.  In these eight patterns, the yellow Fridays after the Super Bowl have seen the Dow closes negative 62.5% (5 of 8) of the time.

But, what about the six patterns that have occurred since the S&P's began trading, i.e. 1993, 1994, 1995, 1996, 1997. 1998:
1.  Of these six patterns, the green Fridays prior to the Super Bowl have seen the SP closes split 50/50.
2.  Of these six patterns, the yellow Mondays after the Super Bowl have seen the SP closes also split 50/50.
3.  Of these six patterns, the green Tuesdays after the Super Bowl have seen the SP closes positive 83% (5 of 6) of the time.  These daily highs:  3:10, 3:00, 2:05, 11:35, 10:30, 9:00.  Respective daily lows:  8:45, 9:40, 8:35, 9:45, 2:50, 2:45.  
4.  Of these six patterns, the red Wednesdays after the Super Bowl have seen the SP closes again positive 83% (5 of 6) of the time.  These daily highs:  3:15, 2:50, 2:50, 2:45, 2:40, 11:25.  Respective daily lows:  1:45, 8:35, 9:10, 8:40, 8:35, 2:25. 
5.  Of these six patterns, the blue Thursdays after the Super Bowl have seen the SP closes yet again positive 83% (5 of 6) of the time.  These daily highs:  3:15, 3:15, 3:00, 2:50, 11:20, 8:35.  Respective daily lows:  11:15, 8:35, 9:25, 10:45, 8:45, 11:20. 
6.  Of these six patterns, the yellow Fridays after the Super Bowl have seen the SP closes negative 66.6% (4 of 6) of the time.  But, these days have been very volatile as is obvious by comparing the daily lows with the respective highs.  Daily lows:  3:05, 3:00, 2:05, 1:55, 12:35, 8:35.  Respective daily highs:  2:40, 9:35, 12:10, 11:30, 10:10, 1:50.

There you have it.  Just a few of the multiple program trading precedents we have regarding market activity surrounding the Super Bowl.   If you would like to learn more about Program Trading and how it does affect your personal trading efforts, such as knowing in advance how to anticipate when buy or sell programs will hit the market and your stocks and ETF's,  then consider attending one of the handful of Program Trading Seminars that we do each year.   These weekend sessions are limited to a small number of traders for more personal attention to each participant.  References are available upon request.

If you have any questions, please feel free to contact us toll free at 1-877-737-7736.  We also welcome your questions via email.

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