Monday, 21 January 2008

What will the Super Bowl Indicator tell us this year?

As we have been watching the stock markets sinking deeper and deeper lately, many investors and traders are desperately looking for market indicators and other magic signs that will tell them about the future market performance. As I was going through the news, I found a pretty funny article about the so called Super Bowl Indicator. The idea behind it is simple enough: if the Super Bowl game involves one NFL team and one AFL team, then the overall stock market performance during the year may be judged based on the outcome of the game. The Indicator says that the stock markets are likely to end up higher at the end of the year of the game if the NFL team wins the game, but are likely to go lower if the AFL team wins. In the past, the Indicator was "correct" in 33 out of 41 outcomes, which means the 80+% success rate, the number which is well above highly questionable predictive powers of the fast majority of so called stock market gurus.

If we are to trust the Super Bowl Indicator's crystal-ball magic, then this year the Bulls will be praying for the New York Giants, while the Bears will cheer for the New England Patriots. The author in the article quite correctly states that the indicator might have gained qualities of the self-fulfilling prophecy phenomenon. I think that in the short-run this can probably work and we may indeed have a rally and a drop in US indexes shortly after the game, depending on its outcome. After all, many traders and investors are football fans... We will see if the Indicator works in just twelve days, on February 3, 2008. Plan your trades accordingly on Monday, February 4th. :-)

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