NDX Volatility Following Fed's Rate Hike, IGV & SOX Dispersion Grows

• NDX often reverses its initial direction in the week following an FOMC decision, with the last decision seeing a 2% drop followed by a nearly 9% gain.
• The market dislikes uncertainty, and the Fed's commitment to less transparency contributes to this, making options market forecasts valuable.
• Implied volatility for NDX options is currently muted (around 19% near-term) but rises to the mid-20s for longer timeframes, reflecting anticipated future catalysts.
• There's a persistent and expanding 'teeter-totter' effect between the Software (IGV) and Semiconductor (SMH) sectors, indicating high dispersion under the index's calm surface.

The discussion focuses on the Nasdaq-100's (NDX) historical reactions to Fed rate decisions, noting frequent reversals of initial 'knee-jerk' moves in the following week. It also highlights the growing dispersion between software (IGV) and semiconductor (SMH) sectors, despite overall low implied volatility in NDX options, suggesting potential future catalysts like the upcoming election could increase market uncertainty.