Fed Chairman Ben Bernancke is the first Fed chair to be named Time Magazine's Person of the Year³, and the chairman of the Fed has only graced the cover of Time on five previous occasions. How has the market responded in the past to this event? Researching this question in 4|1 target=_blank>Time Magazine's archive of covers⁴, we find that the first Fed chair was Arthur Burns, who appeared on the cover with George Schultze in August, 1971.

Q: How has the S&P 500 index performed in the past when the chairman of the Federal Reserve Bank has appeared on the cover of Time magazine?

A: According to the 5 previous occurrences of this event, EventEdge indicates that SPX has shown a very strong bullish edge that peaks 7 trading days after the event. Thus, the projected date for the peak of the bullish edge relative to the current event date (Monday, 28 December 2009) is Wednesday, 6 January 2010. SPX rallies in 100% of the cases (5 of 5) by an average of 1.8% relative to the close on the event date. The overall return of the 5 cases is 1.8%, which, based on the close of SPX on the event date (1127.78), provides a target price of 1148.08.

Let variable values:
@	=	SPX
theEvent	=	IF
   Date is 8/16/1971
OR
  Date is 10/22/1979
OR
  Date is 3/8/1982
OR
  Date is 11/10/1997
OR
  Date is 2/15/1999
OR
  Date is 12/28/2009
THEN 1
ENDIF


      Date   Day            t+1            t+7           t+15           t+25           t+37

08/16/1971   Mon            1.2            1.7            2.4            0.6            1.3
10/22/1979   Mon           -0.4            1.1            2.8            5.6            6.9
03/08/1982   Mon            1.4            1.6            4.6            8.1            8.2
11/10/1997   Mon            0.3            2.5            5.5            5.1            6.1
02/15/1999   Mon            1.0            1.9            4.3            5.4            9.3
12/28/2009   Mon            NaN            NaN            NaN            NaN            NaN

             Avg            0.7            1.8            3.9            5.0            6.3
          AvgPos            1.0            1.8            3.9            5.0            6.3
          AvgNeg           -0.4            NaN            NaN            NaN            NaN
          PctPos           80.0          100.0          100.0          100.0          100.0
          PctNeg           20.0            0.0            0.0            0.0            0.0
         Maximum            1.4            2.5            5.5            8.1            9.3
         Minimum           -0.4            1.1            2.4            0.6            1.3
          StdDev            0.8            0.5            1.3            2.7            3.1
           ZStat            0.9            3.4            3.0            1.8            2.1
        Variance            0.6            0.3            1.7            7.4            9.5


6 Occurrences

Comments:

Web Address of this trading idea:

http://www.markethistory.com/subscribe/best_of/content.html/16649.html

Links:

¹ http://www.lim.com
² http://www.markethistory.com/content/analog/analog.html?ticker=SPX
³ http://www.time.com/time/covers/0,16641,20091228,00.html
⁴ http://search.time.com/results.html?D=federal+reserve&sid=125BCBA941DB&Ntt=federal+reserve&N=46&Nty=1&Rc=covers&Ns=p_date_range|1
⁵ http://www.markethistory.com/staff/detail.html?s=gibbons

Buoyant Ben Bernanke - Time's Person of the Year (1)

Comments:

Web Address of this trading idea:

Links: