.SPX: Don't Size Huge on Wednesday During the Event---WAIT until Thursday
Futures are pricing an 85% chance of a hike Wednesday, and decades of data says the rate decision still won't move this market
$S&P 500(.SPX)$ has done this 44 times since 1997, and the vote itself barely registers
The decision day averages a 0.94% move with a 1.23% intraday range. A normal session is 1.06%. That's 1.16x. 86% of hike days moved LESS than 2%.
The median is flat because the market moves hard in BOTH directions and they cancel out
They don't cancel evenly, though:
Up weeks average +1.10%
Down weeks average -2.02%
Red price action runs roughly 2x the greens through the first week
Here's the tradeable part:
It isn't Wednesday that sets the week. It's THURSDAY
When the session after the decision closes green, the week finishes green 71% of the time. When it closes red, just 17%
Wednesday's 2pm knee-jerk reverses the next session 57% of the time. Thursday's close is the read
And the real move shows up later:
One month out, the average move is 2.90%, a 200% increase from the decision day move.
During this window, 61% of the time $S&P 500(.SPX)$ moves more than 2%. Ranges run between -9.25% to +8.30%.
But the median only lands at +0.16%, against +1.27% for a random month in the same timeframe
What does this mean for the average trader? The bigger move comes later!
Don't size huge on Wednesday during the event, WAIT until Thursday.
When markets keep you watching, knowing when to switch off matters too.
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