Strong Drops Just Before A Fed Day

Likely partially due to the fact that Fed Days have generally been positive, strong selloffs the day before have been uncommon. One study I ran last night looks at other times the SPX sold off at least 1% on the day before a Fed Day. The general results are below. It should be noted that I only looked at scheduled Fed Days. Unscheduled/surprise meetings were not included in the results.

These would seem to strongly favor a bounce on Wednesday. In last night’s Letter I included all the individual instances along with some additional discussion.