The Super Bowl “Indicator”: Verizon Communications Inc. (VZ), Caterpillar Inc. (CAT)

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Ready, set, fall
The Super Bowl indicator, which was accurate in 28 out of 31 years between 1967 and 1997, poses an interesting quandary for this year’s winner. On the one hand, although the Ravens trace their team’s origin to the Cleveland Browns, which was originally an NFL team — those teams in the NFL prior to the NFL-AFL merger became NFC teams — the Ravens entered the league as an AFC team. Confusing the picture even more is the fact that when the Cleveland Browns were given new life as an expansion team, they continued to exist as an AFC team. One might argue that the team should be counted as an NFC team, but as the San Francisco 49ers proudly represented the NFC, the honors this year must go to the AFC. As such, the market is heading down, if the indicator holds.

Two key pieces of economic data were released last week that one would expect be taken more negatively than they were. U.S. gross domestic product was negative, and the jobs number came in slightly lower than forecast. According to a poll of economists conducted by Reuters, the expectation had been that the economy would add 160,000 jobs in January and that the unemployment rate would hold at 7.8%. In reality, the unemployment rate ticked up to 7.9% as only 157,000 jobs were added to the labor market — not a disastrous miss, but a miss.

Apparently overshadowing the current numbers was the fact that the last two months of 2012 were revised higher by a combined 127,000 jobs and that the averages calculated for both 2011 and 2012 looked better as well. The market’s enthusiasm was sufficient to bring the Dow above the psychologically important 14,000 level. With the all-time high in sight, I foresee an imminent correction — particularly with those pesky Ravens circling above.

In all seriousness, the Super Bowl indicator is a fun little coincidence, but not a good basis upon which to trade. To put this in perspective, if you carry pi out to enough decimals, eventually you will find your phone number; does that mean that the circle is calling you? The market has looked strong, but some cautious optimism is in order.

The article The Super Bowl “Indicator” originally appeared on Fool.com and is written by Doug Ehrman.

Fool contributor Doug Ehrman has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

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