February 3, 2013
Weekly Market Outlook
By Mish Schneider
The market has a way of ferreting out answers to questions that us mere humans struggle with until the opportunity has passed.
How many times have you heard a famous trader describe his secret to success as being based on the fact that he "listens to the market" rather than expecting to outsmart what the market will do next?
Well...
I have to admit my ignorance.
I didn't see this coming, but clearly the market did.
2013 is a TOTAL LOCK ON AN UP YEAR!
The rally since January now makes sense, and the market has anticipated this for weeks as demonstrated by the break out right before the last weekend of the post season NFL games.
In the same way the market has an uncanny ability to rally into a news event that turns out to be "unexpectedly" bullish, right after it got over its obsession with the Fiscal Cliff, the market anticipated that the Ravens would play the 49ers in the Super Bowl, and as result, rallied aggressively.
In case this is not making any sense to you yet...
80% of the time a team from the original National Football League (NFL) wins the Super Bowl the market has an up year. If a team from the AFL wins, the odds of an up year are not worth mentioning. Well for all you causal (or agnostic) football fans, this year both teams playing in the Super Bowl are from the NFL! It's a lock. And even most skeptical and the savviest of traders should be willing to admit - this news is least worth a buy the rumor, sell the news trade!
Next year I'll be sure to include this factor in my "January Effect ..." HotScans blog post for trading ideas for the new year.
All that being said, one thing this statistic doesn't insure is whether or not the market will find itself down on the year (before it closes up 80% of the time). And of course, in a few of the years that it didn't pan out as planned, football fan strategists got sacked, in the end zone, and injured - i.e. 2008 when the N.Y. Giants (an NFL team) won, but the market suffered a 34% decline.
So if you're interested in hedging you long position based on the Super Bowl teams you may want to watch this week's Market Outlook video to learn two ways to identify a substantial top in the market should it occur in 2013.
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