Ever since the SVB and Credit Suisse banking crises markets have been worried about contagion fears. The question is whether the Fed will change its policy path in light of the recent banking sector strains. Furthermore, even if it does 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 2 days before the Fed meeting. The largest gain is on 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. So, is the Nasdaq set for gains before the Fed meets on Wednesday?

Major Trade Risks: The major trade risk here would be if further banking troubles emerge that would pressure the Nasdaq lower.

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