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Asian indices including Shanghai Composite are trading in the red at press time, possibly due to caution ahead of the Fed.  

China’s benchmark index is currently trading at 3058, representing a 1 percent drop on the day. The index’s 50-day MA moved above its 200-day MA yesterday, confirming a bullish crossover, which is popularly known as the “golden cross”.

Despite the bullish development, the index is reporting losses today, which validates the argument put forward by many that the long-term crossovers are lagging indicator and have limited predictive abilities at best.  

Other Asian indices like Australia’s S&P/ASX 200, South Korea’s Kospi, and Hang Seng are also flashing red. Meanwhile, Japan’s Nikkei and India’s Sensex are mildly bid.  

The Fed is widely expected to keep rates unchanged today, revise lower rate hike forecasts and announce plans for the end of the quantitative tightening program (balance sheet normalization).  

The markets, however, seem to have priced in the dovish shift. For instance, Asian stocks hit the highest level since June earlier this month largely on expectations that the US central bank would pause rate hikes this year.  

Put simply, the stock markets could see a pullback if the Fed fails to deliver a bigger dovish surprise.