Stocks slipped a little ahead of the Fed decision today.
Still, both the S&P 500 and the Nasdaq are 0.1% away from all-time highs.
So, the question is…
How will a Fed rate cut affect the picture?
Today’s chart offers some historical clues.
Chart of the Day
This table shows how the S&P 500 has performed across various timeframes every time the Fed has cut while the market was near all-time highs.
As you can see, the picture for near-term returns – within a month – is a bit mixed.
But once you extend the timeframe out to 3, 6, and 12 months…
The numbers become overwhelmingly positive.
In short, the data shows that when the Fed cuts near all-time highs…
We are very likely to see many more new all-time highs in the subsequent months.
One year out, the market has been higher 100% of the time with an average double-digit gain.
I’ve been saying for a while now that this bull market still has a lot of juice left.
The data supports this.
Of course, this doesn’t mean we won’t see the market fall after Powell opens his mouth today.
But that would most likely be an opportunity.
I elaborate more below.
P.S. If you missed my latest edition of 2 Trades in 2 Minutes yesterday evening, it’s probably because you weren’t on the SMS priority list. So just Text the word “trade” to 87858 and get on the list now. It’s 100% free.
Insight of the Day
Any pullback after the Fed decision will be a “surprise” that will likely deepen the pullback further.
If the Fed cuts 25 points today, it’ll just be a “base case” scenario. No surprise at all.
To me, that’s the most likely scenario.
And it likely won’t make much of a move in the markets.
But Powell’s press conference after the rate decision?
That’s always a market mover, because it influences the market’s expectations of the Fed’s future actions.
Expect more market volatility as Powell flaps his lips.
And as I said, don’t be surprised if we see the market actually close lower today.
As today’s chart has shown, short-term pullbacks following a Fed cut near all-time highs are not uncommon.
In fact, they happen slightly less than half the time.
And considering how much fear-mongering we’re seeing surrounding the economy and the “overvalued” market right now…
Don’t be surprised if we see a near-term pullback starting today…
One that will shock many people – which will actually deepen any pullback even further.
Still, no one really knows what will happen after the Fed decision today – especially in the near term…
And anyone who says they do is lying to you.
That’s why later this afternoon at 3 p.m. Eastern…
I’m hosting a special LIVE market session to give my real-time reaction to the decision…
And show you my top strategy for trading the market action in the aftermath.
No matter what the Fed does, it will certainly create fast-moving opportunities – IF you know what to look for.
That’s exactly what I will be covering in the live session kicking off at 3pm ET…
So if you haven’t locked in your spot yet, make sure you click here to do so now…
Because I expect the room to fill up fast – and I don’t want you to get left out.
I’ll see you LIVE at 3 p.m. ET unpack the Fed decision.
P.S. If you’re planning to attend on a mobile device, make sure you download the presentation app now so you don’t miss anything when it starts. See you there.
iOS: https://apps.apple.com/us/app/goto/id1465614785
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