Program Trading and the
Super Bowl 2011
Myth versus Reality
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 (or at least the Monday afterward:); and, IF the NFL team won, the year and/or at least the Monday afterward would be bullish and positive. We realized most people just seemed to accept the media b.s. as fact WITHOUT really investigating to confirm the facts. We have confirmed several facts for you as you will see in this synopsis report.
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 Monday 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 such indicator:)
1. Since the very first Super Bowl back in 1967, any Fridays prior to any Super Bowl Sunday have seen the Dow closes split 50/50 of the time.
2. Since 1967, any Mondays after any Super Bowl Sundays (regardless of which team won) have seen the Dow close negative 56% of the time. More recently since 2000, these Mondays have seen the Dow close negative 61.5% of the time.
3. However, reality is that of all prior 46 Super Bowls, the NFC has won 26 times while the AFC has won 21 times. Of all prior 46 Super Bowls, the Mondays afterward have seen Dow closes negative 56% (26 of 46) of the time.
Historic media hype has always continued to convey as "fact" that whenever
NFC team wins Super Bowl the market rallies
strongly positive on Mondays
However, despite popular media hype, the facts are that since 1967 whenever the AFC has won the Super Bowl, the Mondays afterward have closed negative 55% (11 of 20) of the time. BUT, whenever the NFC has won the Super Bowl, the Mondays afterward have closed negative 57.6% (15 of 26) of the time.
Therefore, the statistics on Mondays afterward certainly are NOT what the media would have us believe.
The main debate this year that makes the 2013 Super Bowl and it's potential effects regards the fact that each team, Baltimore and San Francisco both have their roots in the old NFC. Many claim that means nothing but positive, huge rally bias moves in market Monday as well as overall for the entire 2013 year. But, others debate that since Baltimore is now officially in the AFC that point is moot. As this perspective is obviously very debatable, we decided at least the one thing we could briefly check is HOW the markets have reacted immediately after Baltimore OR San Francisco have won Super Bowl Sunday.
Per several inquiries, we have examined how the
markets reacted the last times Baltimore won a Super Bowl in 2001 (as the
Ravens) and in 1971 (as Baltimore "Colts" before move to Indy); and,
remembering this is the AFC team which the media always tries to hype as
being "negative" for the market, etc.) Yet,
as you see, of these two previous Super Bowl "Baltimore"
wins, the market's immediate reaction was positive.
(a.) Monday 1/29/2001 was day after Baltimore "Ravens" won Super Bowl. The Dow closed positive; with daily low 8:35 CST; the daily high 2:15 CST.
(c.) Monday 1/17/1971 was day after Baltimore "Colts" won Super Bowl, the Dow closed positive.
Per several inquiries, we have examined how the
markets have reacted in history each time the San
Francisco (remembering this is the NFC team, i.e. the media
always hyping that an NFC win was positive
for the market, etc.) Yet, as you see, of all the 49ers
previous wins, the market's immediate reaction was
negative in four of five instances.
(a.) Monday 1/30/1995 was day after 49ers won Super Bowl; and, the Dow closed negative; with daily low 1:50 CST; the daily high 9:35 CST.
(b.) Monday 1/29/1990 was day after 49ers won Super Bowl; and, the Dow closed negative; with daily low 1:05 CST; the daily high 8:55 CST.
(c.) Monday 1/23/1989 was day after 49ers won Super Bowl; and, the Dow closed negative; with daily low 3:05 CST; the daily high 8:45 CST.
(d.) Monday 1/21/1985 was day after 49ers won Super Bowl; and, Dow closed positive; with daily low 9:05 CST; the daily high 2:40 CST.
(e.) Monday 1/25/1982 was day after 49ers won Super Bowl; and, Dow closed negative.
There you have it. Just a very 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. The first of the only four Program Trading Seminars scheduled for 2013 will be the weekend of February 23rd/24th in Palm Beach, and are also available via online conferencing.
If you have any questions, please feel free to contact us toll free at our 24/7 voicemail inquiry line 1-877-737-7736. We also welcome your questions via email, i.e. thus whether by voicemail inquiry or email inquiry, we will followup with you as promptly as conveniently possible.