Paranormal Activity 3 confirms Fear rules the Home

Paranormal Activity 3 scared away all the competition at the box office this weekend, recording the biggest debut of any film in October, topping all previous horror film records with $53 million in ticket sales. All this for a movie that costs only $5 million to make! This third installment of the home movie phenomenon about a shadowy possession scares the pants off people who like to feel safe in their own homes. Not any more. The Paranormal Activity series has hit a nerve with jaded horror fans who have abandoned the “traditional” stories, as evident by the disappointing box office performance of recent scary flicks like The Thing, Shark Night and Apollo 18.

Real Steel delivered as expected last week, with the Dow Jones rising 1.4%. Now we’re into scary territory and the record breaking performance of Paranormal Activity 3 confirms the herd is scared and even their homes are not safe havens any more. Expect the markets to be nervous and looking to sell at any signs of shadowy demons walking across their trading screens this week. The market has rebounded for the last four weeks but, with Europe meeting this week to decide how to fund their debt problems, expect their every progress statement to move markets up and down.

As for Paranormal Activity 3 as a bear indicator, the previous movies were both negative for movies. The original Paranormal Activity debuted on October 23, 2009 and the Dow Jones dropped -2.6% the following week. Paranormal Activity 2 topped the October 22-24, 2010 box office and the Dow fell -0.13%, after rising the previous three weeks in a row. We shall see if Paranormal Activity 3 continues the bear trend along with the box office dominance we’ve seen from this series.

The one Hollywood lesson here is that a cheap horror film pays off big time at the box office for producers. If you’re trying to break into the business, rent a house and video camera and shoot people sleeping in their beds and you’ve got a hit.

dow jones chart oct 23 2011

MarketBOB's Long Wave for Oct 23, 2011

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