Retail investors are poised to pile back into US stocks this month after a sharp cooldown in September, Citadel Securities’ head of equity and equity derivatives strategy Scott Rubner said. While October could still be volatile, the month offers a better entry point for investors to “reload” as earnings and corporate buybacks are set to return, Rubner wrote in a note to clients.
“The market enters Q4 from a cleaner starting point, with considerably more capacity to rebuild exposure” after positioning cleared and valuations fell, he said. Trading volumes in cash equities slid to 0.94 times their trailing one-year average in September, a 2026 low, Rubner wrote. Retail options premium fell to the same multiple. Stock activity now sits 26% below its June high, and options premium has shrunk by about a third from the 1.41 times reached then.
Seasonality also favors a rebound. Cash volumes climbed between September and October in each of the last four years, averaging a gain of around 8%, while options activity rose in the past three, by roughly 15% on average, according to Rubner. Strategists at JPMorgan Chase & Co. led by Arun Jain called September the quietest month for cash-equity trading since December 2024. Last week’s flows were still muted, ranking in the 12th percentile.
Stocks finished September in the red as worries about inflation and higher rates weighed on sentiment. Even so, Rubner argued the pullback was healthy, clearing out stretched positioning. “September delivered much of the reset we wanted to see,” he said. ‘Q4 is a cleaner starting point.’
Source: Bloomberg Markets · Summarized by HeadlinesBriefing