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Technical/Situational Analysis in a Nutshell

The methods behind my madness.

September 17th, 2007

You will find numerous references to both 'Technical' and 'Situational' analysis on my site, mostly because these 2 terms are largely interchangeable (as they apply to the National Football League) and they also happen to describe the predominant method of handicapping that I use to beat the Vegas line.

Many of you may not be familiar with the term 'Technical Analysis' as it is a tool more commonly associated with the study of stock prices as opposed to point spreads. The official definition of Technical analysis labels it as:

'a method of evaluating future security prices and market directions based on the statistical analysis of variables such as past trading volume and price changes, in order to identify patterns.'

Like its Technical counter-part, Situational analysis involves the study of past data in order to identify significant trends that may continue in the future. It is usually applied to complex systems outside of the world of finance, such as sporting events and the wagering that surrounds them, along with many other forms of socio-economic behaviour.

In the case of the NFL, security prices are replaced with the point-spread and trading volume morphs into betting volume. Instead of analyzing past market data to identify patterns that may repeat themselves in the future and offer opportunities for profit, we instead focus on key data from historical NFL game results in order to achieve the same goal.

The interesting results and patterns derived from the use of technical and situational analysis are most often called 'Trends', but, in the sports-betting world, the terms 'Angle', 'System' or even 'Super' System are also commonly used.

Technical/Situational analysis is one way to handicap NFL football games, but, it's not the only way (nor is it the most popular technique to be honest).

The majority of bettors will use predominantly fundamental methods to handicap NFL games. This involves studying such things as: Injury reports; the age, experience, stats and perceived skill levels of individual players; how players for both teams match-up in key offensive and defensive battles; game-day weather conditions, and many other related factors, all in an effort to find aspects of an upcoming game that have not been accurately factored into the line by the oddsmaker thereby providing line 'value' that can be exploited.

Situational handicappers (such as myself) believe that all of these obvious factors have already been accounted for in the point-spread and again, look to historical data to isolate specific trends that have proved to be successful versus the line in the past. Not too much time is spent focusing on the merits of whether the spread for a current game is a ½ point high or low based on fundamental match-ups or whether or not a starting QB happens to be side-lined or playing hurt.

Here is an excellent example of Situational analysis in action: Did you know that, since 1994, teams with a Pass Defense Rating of >+0.50 that are coming off a game in which they surrendered less than 75 rushing yards are a dismal 180-274 ATS in their next game? This is powerful stuff and as you may have noticed: the actual spread for the upcoming game is irrelevant. What we have here is a clear opportunity to turn a profit based on only 2 key factors, neither of which involve the actual value of the spread itself or any fundamental factors such as the injury status of players on either team.

One of the most significant benefits of using Situational analysis is that it removes all 'emotion' from the equation. Inherent biases and 'Gut feelings' bettors may have towards certain teams are thrown out the window. The above situation has worked whether it was playing on Carolina or New England; a small underdog or big favourite; healthy teams or injury depleted ones.

The same lack of emotion is usually not the case for 'Fundamental' handicappers, where the evaluation of rosters and individual player strengths is much more subjective. Fundamental handicappers often agonize over whether or not Team X will play better with 'John Q' as their starting QB instead of 'Bill X' in a fruitless attempt to outsmart the linesmaker in the very area where they are strongest: player evaluation. In contrast, Situational analysis provides a clear and consistent framework in which selections can be made with relative confidence and the act of 'second-guessing' one-self is kept to a minimum.

Situational analysis is not perfect of course and there are some potential pitfalls involved with its usage that inexperienced bettors and novice Situational handicappers can fall into.

The biggest problem is that it can be very easy for those that have little or no experience in this area to falsely depend on situations that have generated records such as 21-0 ATS over a long period of time with the expectation that this historical record will be an accurate predictor of future performance. Needless to say, these false expectations can be disastrous to ones bankroll.

The truth of the matter is that anyone can search an extensive database of NFL games and find many situations that are 28-0 ATS, or 35-2 ATS over the past 2 decades. The problem, is that, unless they consist of related conditions built on very specific stats that have been proven to have predictive value, they are virtually useless as a tool to forecast future results.

Even strong situations based on sound logic that cover many different seasons will often not produce the same winning percentage as their historical results in 'live' games, simply because of the effects of randomness that surely make up part of this past record and the inevitable 'regression to the mean' that will occur as new events are added into the situations pool of games. This is a fact that most professional handicappers will conveniently fail to mention when providing their customers various forms of Situational analysis, but, it is the unfortunate truth.

Having said this, situations with a historical record of 60+ % ATS (and even lower than this if more games are involved) can still provide the bettor with a significant enough advantage in future events as to net them a decent profit, so long as the logic of the situation makes sense and the historical record extends over a number of seasons, involving as many different teams in the league as possible.

This is great news, but, is there a way to determine the exact winning percentage that any given trend or situation will produce down the road based on its past record and other factors?

The answer is yes and I accomplish this task using 5 different variables combined with the ATS record of the situation in question. They are, in no particular order: Average Spread Margin Rating; Recent Game Win %; Previous Team History; Team Distribution and Situation Overlap. These 5 factors allow me to predict the winning percentage that a single situation or grouping of situations should produce in upcoming games with a fair degree of accuracy. This projected winning percentage is otherwise known as a 'Confidence' percentage which is the chance out of a 100 that the team with the perceived advantage will cover the spread.

There are not many other handicappers that currently provide the level of Situational analysis that my subscribers benefit from and even fewer still that can predict the success rate of their situational trends in 'live' games with the same level of accuracy.

The bottom line is this: Don't be sucked in by services that trot out the 21-0 situations based on 9 different unrelated variables that have no chance for future success.

For more information on how I calculate Confidence percentages and details on the 5 key variables listed above, please read Pages 13 and 14 of the 2008 NFL Game Sheets Guide.

For a sample of some of the stats and ratings that have been successful predictors of future point-spread results over the past decade along with examples on the proper usage of Primary and Secondary conditions, please be sure to read the rest of the write-ups on the Articles page.