Many readers are familiar with the work of Colin Cieszynski, CMC's North American Chief Market Strategist. He is the creator and author of the daily "Chart Signals". Colin is also an American Football fan, and in the lead up to the Superbowl he's gone to the data to provide analysis of potential market impacts.
Between us, I have my doubts about the market predictive ability of gridiron games (correlation vs causation anyone?) but I can vouch for the mathematical rigour of the analysis.
NFL Conference Championships and the Stock Market
I’ve been working on the data for my annual Super Bowl preview which will come out next week, and have been thinking about who to cheer for at Sunday’s AFC and NFC Championship games.
AFC Championship: New England at Denver 3:05 pm EST Sunday
This is a big game for traders. If you like volatility, this is the matchup for you! Between them the Patriots and the Broncos have been to the Super Bowl 14 times, and in 8 of those years, the Dow has finished the year up or down more than 10%.
If you are bearish in the markets or liked last year’s market action and want more of the same, New England is the team for you! Since 2002, in years where New England has played in the Super Bowl, the Dow has finished the year down 6.2% on average.
If you are bullish on the markets, Denver is the team for you! The Dow has finished up 9.5% on average in years Denver has played in the Super Bows and returned an average 23.1% following Denver’s two Super Bowl wins.
The markets also appear to really like when the Manning brothers play in the Super Bowl. The three previous times Peyton Manning has played in the Super Bowl, the Dow has finished up 9.2%. Since 2010 one of Archie Manning’s has played in the Super Bowl in even numbered years (so Peyton is due). In these years, the Dow has finished up 12.5%, better than the 9.6% average return of the last three odd numbered years which had no Mannings in the Super Bowl.
NFC Championship: Arizona at Carolina 6:40 pm EST Sunday
These two teams have only been to the Super Bowl once each and there wasn’t much difference in return between them, so it's a toss up for the markets.
This is the 30th anniversary of the last time a 15-1 team played in and won the Super Bowl, when the Chicago (ahem) Bears, destroyed the New England Patriots 46-10. That year, the Dow finished up 14.6%
In an interview last month, I suggested stocks could go up about 12% this year, about 1.5 times the 8% long-term average return for the S&P 500.
So if Tom Brady can pull off a conference win without the extra special home field advantage he had last year, I, as a bull on the markets would definitely be rooting for Carolina’s Cam Newton and Co. to repeat the performance of Walter Payton, The Fridge, Jim McMahon, et al.