Super Bowl LIII Recap "13-3"
Super Bowl LIII…well, that sucked.
Did we really just get a single TD 13-3 Super Bowl? We sure did, man…
We’d love to say there is a lot to unpack with the game but there really isn’t too much. Rams offense (2nd ranked in 2018) doesn’t show up. Patriots offense finds a way (as they always do) with one actual drive when they really needed it and end up winning this mess of a game.
No reason to relive any of it so let’s get into the market recap and figure out what happened, why and what we can take away going forward in future markets.
Story of the market….
Both teams trade north of $50 for 3.5 quarters until the lone New England TD with 7 minutes left in the 4th quarter.
Why did the markets trade north of $50 is probably the first big question traders were asking themselves when watching how each team was trading. Well, the simple answer when traders enter the market they are given $2K in virtual currency which acts as the buying power to push shares higher coupled with a market that didn’t also have traders selling shares so it created a perfect storm of money going into the market but not coming out. When there is only demand, prices go higher, its as simple as that. Remember the markets are only defined by the buying and selling of the traders in the market so there is no correlation to anything but independent trade flow on a per team basis (the sum of teams does not have to be 100). With the game really not showing any flow or trading range it forced traders into one of four camps;
Four types of traders
Long Both - Waiting it out
Long Nobody and heavy in cash waiting for game to define trend
What we think was happening during Super Bowl LIII (and likely will occur in any tight game with evenly matched teams) was buying pressure lifting markets with little to no offsetting selling pressure as most players held shares of both teams waiting to see which team would be the first to break out. This never really happened until much later in the game with the Sony Michel TD run which created the first big rally of the game and a steep sell off for anyone who owned Rams shares.
For most of the game markets were trading strongly with high volume and each teams shares feeling like they wanted to go higher with any positive game events on the field. Unfortunately the game never produced enough positive news to drive a clear trading range and traders ultimately needed to decide which team they thought was more likely to get that first big break and set a more defined trend in the market.
Once the Patriots take the 10-3 lead with 7mins left in the 4th quarter you see the Rams market breakdown quite quickly in what was still a one possession game. Rams shares did find some strong support around $30 while everyone waited to see if Jared Goff and the Rams could find a drive to get back into this game. This was the first real market shift of the game and it was the move that defined the leaderboard because those players with Rams shares were stuck and everyone already long the Patriots just gapped up and had little to no reason to take profits because on the next Rams drive Goff throws the interception and it was lights out for Rams shares; no bids and a bottom heading straight to $0.
TRADER TAKE AWAY:
When teams are playing in a tight range ($45 to $55) it's important to be prepared to make a decision when the game finally gives the markets a reason to run. That doesn’t always need to be a decision to buy and sell on that new information it could be a decision to wait and see how the market resets itself and then make a more educated decision on how to trade going forward. The benefit is you have more information to make that decision (new trading range top/bottom) but the risk is that you are missing a major move that ultimately defines the entire game. This Super Bowl was a great example of needing more information to take a big position while recognizing the risk of missing a single move that defines a game.
The line between the quick and the dead is a fine one.