In a recent conversation with a colleague, I jokingly said that the Superbowl indicator is to stock markets what Groundhog Day is to meteorologists -- that is, a cute observation. Well, the good folks at Bespoke Investment Group now inform us that there is a little cross-pollination going on: That's right, they appear to have invented a Groundhog Day indicator for the stock market.
For data going back to 1944, when Punxsutawney Phil does not see his shadow, the stock market tends to perform better for the remaining weeks of winter. In other words, early spring is bullish. According to Bespoke, when Phil sees his shadow, the S&P 500 has risen on average just 0.16 per cent from Groundhog Day to the first day of spring. But when Phil does not see his shadow, the average return is far more robust, at 4.06 per cent.
On Wednesday morning, Phil did not see his shadow, so investors can rejoice.
"So if all the snow and rain has you feeling lousy, take heart in the fact that Spring is on the way, and the market is heading higher...at least according to Phil," Bespoke said on its blog. " And if spring never comes or the market goes down, remember that this is a groundhog we're talking about!"
Now, what does the Superbowl indicator say about whether or not we're due for an early spring?
David Berman