Ever since the SVB and Credit Suisse banking crises markets have been worried about contagion fears. The question is this , ‘will the Fed change their policy path in light of the recent banking sector strains’. Furthermore, even if they do alter the path of US rates will that be enough to send stocks higher?
One interesting event dynamic to be aware of is that of the Nasdaq 100 leading up to a Fed meeting. The short term rate sensitive Nasdaq tends to gain in the 2 days before the Fed meeting. The largest gain is on the the day before the Fed meeting. Look at the chart to see the behaviour of the Nasdaq over the last 296 Fed meetings spanning 37 years.
Is the Nasdaq set for gains before the Fed meet on Wednesday!
Major Trade Risks:
The major trade risk here would be if further banking troubles emerge that would pressure the Nasdaq lower.
Remember, don’t just trade it, but Seasonax it!
