The Super Bowl Indicator

The Super Bowl Indicator

Given that the Super Bowl is such a big event for Americans, can we spot any seasonal trends before and after the event? Is the Super Bowl bullish or bearish for stocks and bonds? Is there a Super Bowl indicator?

The stock market performs best after in the days after the Super Bowl final with abnormal gains – much better than any random period. Thus, the best Super Bowl indicator is the date of the final.

Let’s find out and run some backtests:

What is the Super Bowl?

The Super Bowl is the annual championship game of the NFL, played on the second Sunday in February. The winning team is awarded the Vince Lombardi Trophy.

The Super Bowl is the championship game of the National Football League (NFL), played between the champions of the American Football Conference (AFC) and the National Football Conference (NFC). It is the most watched sporting event in the United States and one of the most watched sporting events in the world (however, as a European, does anyone really care outside the US?).

The Super Bowl is played on the second Sunday in February each year. The winning team is awarded the Vince Lombardi Trophy, named after the legendary Packers coach who won the first two Super Bowls.

The Super Bowl is more than just a football game. It is a cultural event, with millions of people tuning in to watch the game and the halftime show. The Super Bowl is also a major advertising event, with companies spending millions of dollars for commercials to air during the game.

However, there is no holiday or non-trading day in connection to the day.

The Super Bowl Indicator

This article does not backtest the Super Bowl Indicator:

If a team from the American Football Conference (AFC) wins, it is said to be a bearish sign for the market, while a victory by a team from the National Football Conference (NFC) is considered bullish.

This is a spurious correlation, but it has held up remarkably well, even after it was “revealed”. To read more, please click on this link:

Super Bowl seasonalities and effects

Let’s look at three different backtests:

Performance the day before the Super Bowl final

The first backtest looks at the performance of S&P 500 the day before the Super Bowl final:

We buy at the close on Thursday and sell at the close on Friday (the day after) from q967 until today, thus owning S&P 500 for 24 hours. The performance looks like this:

The performance has been pretty erratic.

Performance N-days BEFORE the Super Bowl final

Let’s look at how stocks perform in the days leading up to the event. We make the following trading rules:

  • We buy S&P at the close N-days before the Super Bowl final; and
  • Sell at the close on the first trading day after the final.

The table below summarizes the results from 1967 until today:

Column three shows that it’s all losses.

What about bonds?

From 2003 we get the following results:

It’s few trades, but performance has been rather good.

Performance N-days AFTER the Super Bowl final

Let’s look at the performance if we buy at the close of the first trading day after the Super Bowl final and hold for N-days:

Overall, the results are much better than any random day (the average gain has been circa 0.04% per day). If we exit after five trading days, we get the following equity curve:

Super Bowl trading strategy
Super Bowl trading strategy

For bonds, it has been a different story:

For bonds, the data started in 2003, and thus it’s a short history. Before the year 2000, the performance was rather flat.

Super Bowl trading code and dates

We have the dates and code available for Amibroker and Tradestation. It’s available for those subscribers who are at least Gold members.

Who invented the Super Bowl Indicator?

Leonard Koppett invented the Super Bowl indicator in 1978, observing that it had never been wrong.

However, since then, the indicator has been correct “only” about 67% of the time. However, no economic or financial justification exists for the correlation between the Super Bowl and the stock market.

Despite its lack of scientific basis, the Super Bowl Indicator remains a popular topic of discussion among investors and football fans. It is a fun and harmless way to add a bit of excitement to the Super Bowl experience.

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