Scott Rubner, head of equity and equity derivatives strategy at Citadel Securities, says October offers investors a better entry point after September’s sharp cooldown.
Rubner outlined three core reasons why investors should add exposure to U.S. stocks heading into the fourth quarter of 2026.
His argument centers on cleared positioning, improving seasonality, and the return of two major demand sources: corporate earnings and share buybacks.
“The market enters Q4 from a cleaner starting point, with considerably more capacity to rebuild exposure,” Rubner wrote in a note to clients.
September trading activity dropped significantly, with cash-equity volumes falling to 0.94 times their trailing one-year average, the lowest reading of 2026.
Retail options premium fell to that same 0.94-times level, while overall stock activity is now 26% below its June high.
Options premium has also declined by roughly one-third from the 1.41-times average reached in June, reinforcing Rubner’s view that the month served as a useful clearing event.
Rubner identified October seasonality as a key catalyst, noting that cash-equity volumes have increased from September to October in each of the past four years, gaining about 8% on average.
Options activity has also risen in each of the past three September-to-October periods, with an average increase of roughly 15%, adding further weight to the seasonal argument.
Quarter-end rebalancing concluded on September 30, removing what Rubner described as one of the largest sellers of equities as global real money investors and pension funds reduced stock exposure to meet mandated asset allocations.
The flow calendar shift coincides with the start of midterm election seasonality on October 1, which Rubner called the best month of the year during midterm election cycles.
Corporate buybacks are set to return around October 13, with more than half of S&P 500 companies expected to reopen repurchase windows by November 1.
Rubner said October and November typically represent the best corporate demand periods of the year, and tax-loss selling pressure from equity mutual funds is also expected to ease.
Low investor positioning and negative sentiment form the third pillar of Rubner’s thesis, as those conditions could amplify a rally once prices begin to move higher.
In midterm years, Q4 has averaged gains of more than 5.5% from end-September, compared to just under 3% across all years.
Systematic strategies are not expected to become sellers of equities given strong price trends and lower volatility levels, addressing what Rubner identified as a key concern heading into September.
Rubner acknowledged that October could remain volatile but argued the recent pullback has meaningfully improved the starting point for investors looking to add risk.
A sustained recovery in cash and options volumes would confirm that the September reset is translating into fresh demand from both retail and institutional participants.
For Rubner, the overarching message heading into the final three months of the year is clear. “Q4 is the reload,” Rubner wrote.
