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Super Tuesday could be a stock market rally

If Super Tuesday polls are right, there could be two formidable front-runners in the race for the White House. There also could be an uptick in the stock market.

Historical data suggest that markets tend to rally in the week following a Super Tuesday in which a clear favorite is chosen by the political parties, according to data from analytics firm Kensho.

Look at 1996 for example. After dropping 2.9 percent in the week leading up to Super Tuesday, the S&P 500 turned around after then-favored candidate Bob Dole swept the contests. Investors celebrated by pushing stocks up 2.3 percent in the next week.

Super Tuesday brings out the true herd mentality of the investor base — skittishness when uncertainty lies ahead, and overconfident jumping on the bandwagon when the coast is clear.

This year, the big primary day is Tuesday. A dozen states are holding presidential primaries or caucuses, assigning a fifth of all party delegates, likely offering some clarity on a presidential race that's seen its fair share of red faces, upsets and collapses.

Another banner year was 2012. Mitt Romney's solid win on Super Tuesday all but sealed his nomination and the markets rallied almost 4 percent in the week following. That was after a 2 percent drop the week before.

When there isn't an obvious favorite and no candidate locks up the nomination is when stocks just drop, like they did in 2008 after Hillary Clinton and Barack Obama split Super Tuesday down the middle.

Investors look to a future of uncertainty and party bickering as a danger point for stocks, opting to sit on the sidelines rather than buy.

That brings us to 2016. Clinton and Donald Trump could lock up their respective nominations with strong showings. As far as Wall Street is concerned, they might not seem like the friendliest candidates.

Remember, the data suggest the market's short-term bias doesn't care so much about who wins, just that somebody emerges as a front-runner. Clarity and direction is good. Uncertainty and increased political volatility is bad. That's what traders are betting on.

Disclosure: NBCUniversal, parent of CNBC, is a minority investor in Kensho.