As one of the largest sporting events in the United States, the Super Bowl captures attention by millions. Does it also affect the stock market? Many investors wonder whether there are seasonal trends in the days leading into and out of the Super Bowl. With all the excitement and spending surging within this event, a pertinent question surfaces: does the Super Bowl present a bullish or a bearish signal for stocks?
At QuantifiedStrategies.com, we analyze trends in market performance and seasonal patterns. We try to find trading opportunities that most people have not detected using historical data. Our research has been as deep as trying to code up dates for the Super Bowl, which began in 1967, to establish its impact on the stock market, notably the S&P 500 index.
In this article, we want to discuss the trading dynamics that have links with the Super Bowl and its performances before and after. We will like to present you with actionable trading rules based on findings which might help you profit from this specific market phenomenon. You’ll be equipped to make decisions when trading following the excitement of the Super Bowl at the end.
What is The Super Bowl?
What is the Super Bowl?
The Super Bowl is the NFL annual championship game played on the second Sunday of February. One of the most-watched sporting events in the United States, the Super Bowl also features as one of the most-watched events in the world. It brings families and friends together, often with parties, food, and an atmosphere of competition like no other.
Cultural Impact
The Super Bowl Impact on a Number of Industries, Including Food and Beverages, Advertising, and Tourism. This is the period when consumers go on big spending sprees, which oftentimes puts economic activities on the ascending order, thereby raising questions about stock market performance.
Pre-Super Bowl Market Performance Analysis
Measurement Indicators
We analyzed the S&P 500 and observed the days preceding the Super Bowl. Below is what we discovered:
Negative Average Gains: According to historical data, buying the S&P 500 one to five days prior to the Super Bowl has brought negative average gains. This fact simply means that market mood is most likely to drop ahead of the event because investors get busy during celebrations.
Contributing Factors to the Trend
Some of the factors that contribute to such a trend may include:
- Investor Sentiment: On Super Bowl Sunday, investors tend to get overexcited and divert their attention to those markets which have no relevance to stocks; therefore, equities are not that attractive.
- Economic Indicators: Even though reports of earnings from companies may be issued during such a period, not everyone will invest in the companies as they can alter their status of economic future; therefore, bearish feelings dominate.
- Increased Volatility: Sporting events are generally characterized by uncertainty, hence the volatility in the market scares investors away from investing.
Post-Super Bowl Performance
We analyzed the post-Super Bowl performance data of the S&P 500 index. We discovered a very interesting trend:
- Profitable Opportunities: Buying on the final trading day after the Super Bowl and selling on the fifth trading day afterward results in an average profit of 82% per trade. That’s much greater than any other trading period since at least 1967 shown here.
Consistent Performance
Here is the data on the performance metrics:
| Period | Average Gain (%) |
|---|---|
| 1 Day After Super Bowl | +16% |
| 5 Days After Super Bowl | +82% |
This persistent positive performance suggests that the market often rebounds after the Super Bowl, motivated by renewed investor confidence and economic optimism.
Trading Rules Based on Super Bowl Analysis
Actionable Strategies
Based on our research results, here are the trading rules you can use around the Super Bowl:
- Super Bowl Before: Do not buy the S&P 500 during the last one to five days before the Super Bowl because history data also shows that average gains are reduced in these four to six days.
- After the Super Bowl Entry Point: Buy the S&P 500 on Super Bowl day.
Exit Point: Sell the S&P 500 on the fifth trading day after the Super Bowl.
Risk Management
Even with a great historical performance, prudent management of your risk is prudent:
- Use Stop-Loss Orders: Lock major losses from blowing up in your face by using stop-loss orders to slash the loss if your investment takes an unexpected turn.
- Diversification: Diversify your investments across sectors that have an impact of consumer discretionary sectors that tend to do well following the Super Bowl, such as consumer goods, technology, and entertainment.
Sector Analysis: Where to Invest
Consumer Discretionary
Consumer discretionary tends to fare well due to increased spending typically associated with the Super Bowl, be it food, beverages, or consumer electronics. Stocks in the aforementioned area tend to increase in activity after the Super Bowl and are a wonderful group to be invested in.
Technology Stocks
Companies selling advertising and streaming technology also tend to gain pace during this period. Therefore, higher digital engagement in the Super Bowl may propel higher stock performance into advertising campaigns as advertisers ramp up their efforts going into the event.
Other Likely Winners
Other sectors likely to be affected are:
- Retail: Consumer spending is expected to rise for the parties.
- Entertainment: Companies that are involved in the broadcast and media may win as viewership improves.
There is a good scope of investment for the analysis of historical data and market trends. The stock market appears to be bearish for the days prior to the Super Bowl but develops a surprisingly bullish trend after the post-Super Bowl period, thus allowing scope for maximum profit.
Using the strategies we have outlined below will enable you to navigate the stock market effectively even around this iconic event. It is our promise at QuantifiedStrategies.com to give you that insight and those strategies that will help you exploit seasonal trends, such as what’s known as Super Bowl trading.
Catch the Super Bowl this February, not just as a spectator but an intelligent investor. Visit our website to find out more about other trading strategies and profits that can help you maximize market performance!