Investing.com -- September’s trading slowdown may have left US stocks with more room to rebuild exposure in the fourth quarter, according to Citadel Securities’ head of equity and equity derivatives strategy Scott Rubner, who expects October to offer investors an opportunity to "reload."

Rubner’s argument is straightforward: trading activity has cooled sharply, positioning has been cleared and valuations have come down, while two important sources of market demand -- corporate earnings and share buybacks -- are about to return.

"The market enters Q4 from a cleaner starting point, with considerably more capacity to rebuild exposure," Rubner wrote in a note to clients.

That reset came after a significant drop in market activity. Cash-equity trading volumes fell to 0.94 times their trailing one-year average in September, the lowest reading of 2026, according to Rubner. Retail options premium fell to the same 0.94-times level.

Overall stock activity is now 26% below its June high, while options premium has declined by roughly one-third from the 1.41-times average reached in June.

The slowdown was not limited to retail investors. Strategists at JPMorgan Chase & Co. led by Arun Jain also described September as the quietest month for cash-equity trading since December 2024. Equity flows last week ranked in just the 12th percentile, according to JPMorgan.

October seasonality

Rubner sees a potential catalyst for a reversal in October in the market’s historical trading patterns.

Cash-equity volumes have increased from September to October in each of the past four years, gaining about 8% on average, according to Rubner. Options activity has also risen in each of the past three September-to-October periods, with an average increase of roughly 15%.

That seasonal pattern comes as earnings season gets underway and companies resume share buybacks, potentially giving investors new reasons to put capital back to work.

October is not necessarily expected to be smooth. Rubner acknowledged that the month could remain volatile, but argued that the recent pullback has improved the starting point for investors.

Stocks ended September lower as concerns over inflation and elevated interest rates weighed on sentiment. Rubner, however, viewed the decline as a useful clearing event rather than a deterioration in the market’s underlying setup.

"September delivered much of the reset we wanted to see," Rubner wrote.

The implication is that the market enters October with less crowded positioning and lower valuations, creating more capacity for investors to rebuild exposure if earnings and corporate activity provide the catalyst.

Volume is the test

The key question now is whether the return of earnings and buybacks actually brings investors back into the market.

A sustained recovery in cash and options volumes would provide evidence that the September reset is translating into fresh demand. If activity remains depressed, however, the market could struggle to turn the seasonal October pattern into a broader rebound.

For Rubner, the fourth quarter is therefore less about forecasting a specific market target and more about whether investors begin putting capital back to work.

"Q4 is the reload," Rubner wrote.

Original Article