• Citadel Securities strategist Scott Rubner expects retail investors to return to U.S. equities in October after September's sharp cooldown, calling the fourth quarter a "reload" for exposure.
  • The bullish tactical call hinges on the end of quarter-end rebalancing, the reopening of corporate buyback windows around October 13, and a positioning reset that has left investors underallocated.
  • However, record market concentration—the top 10 S&P 500 companies now account for 41% of the index—and looming earnings risks could derail the recovery.

A September Reset Sets the Stage

After a bruising September that saw retail trading activity cool sharply and AI-related shares suffer a sentiment washout, Citadel Securities' Scott Rubner is telling clients that the worst of the selling pressure is over. In a note dated September 29, Rubner argued that the completion of quarter-end rebalancing on September 30 should remove a major equity-selling flow from pensions and other long-only investors adjusting mandated stock/bond allocations. "September delivered much of the reset we wanted to see. Q4 is the reload," Rubner said.

The strategist's thesis centers on predictable flows—the buying and selling created by calendars, portfolio mandates, and trading mechanics—rather than a sudden shift in the macroeconomic outlook. He expects retail investors to return to U.S. stocks in October after trading activity cooled sharply in September, citing lower positioning and cheaper valuations as a better setup for rebuilding exposure. Corporate share repurchases are also expected to restart around October 13 as the heaviest pre-earnings blackout period ends, with Rubner characterizing October and November as typically strong months for corporate demand for equities.

Buybacks and Retail: The Fuel for a Q4 Rebound

The case for a recovery rests on a confluence of technical and seasonal factors. Rubner's September 17 assessment was deliberately cautious near term, expecting potentially further weakness through month-end but viewing a pullback as an opportunity to rebuild exposure to core U.S. equities. He anticipated a potential recovery to begin in technology and AI-related shares before broadening to the wider market—a pattern that has played out in prior cycles when positioning becomes too bearish.

Corporate buybacks, a normally reliable source of demand, had been largely absent as companies entered blackout periods ahead of third-quarter earnings. Rubner expects that dam to break in mid-October. "October and November are typically strong months for corporate demand," he noted, adding that the reopening of buyback windows should provide a tailwind just as retail investors begin to re-engage.

The seasonal backdrop also favors the bulls. This is a U.S. midterm-election year, and historical data cited by Fortune shows that since 1950, October has averaged about a 3% gain in the S&P 500 during midterm years, positive roughly 73.7% of the time. Morgan Asset Management data cited in the same reporting shows an average Q4 gain of 6.6% in midterm years. UBS (UBS) analysis puts the average September-through-year-end return near 6%, versus about 4% in other years. Still, Rubner is careful to note that these are descriptive averages, not trading rules—negative midterm outcomes occurred in 1978, 2002, and 2018.

Concentration Casts a Long Shadow

While the flow dynamics are supportive, the market's structure presents a significant risk. The 10 largest S&P 500 companies represented a record 41% of the index, according to Rubner's analysis, while the equal-weight S&P 500's performance relative to the cap-weighted index reached its weakest level since 2003. That concentration makes the index particularly dependent on a small group of mega-cap technology and AI names.

"The market is unusually concentrated," Rubner acknowledged, according to people familiar with the matter. "A disappointment in a handful of names could disproportionately affect headline index returns." This is not just a theoretical concern. AI shares had already suffered a sharp sentiment and positioning reset in September, and Rubner's constructive view depends in part on the idea that pessimism and reduced holdings leave more room for a rebound than when investors are already heavily positioned.

The earnings season ahead will be a critical test. Reuters (TRI) reported on October 1 that all 11 S&P 500 sectors were expected to post earnings growth in 2026, supported by a solid economy, though investors are increasingly concerned about whether an unusually strong profit-growth period can persist. Buybacks, retail flows, and seasonality can affect the timing of market moves, but they cannot indefinitely offset a material deterioration in corporate profits, growth, inflation, or financing conditions.

Citadel Securities: A Market-Making Powerhouse

The firm behind Rubner's call is not the same as Ken Griffin's Citadel hedge fund, though both originated with Griffin. Citadel Securities is a privately held global market-making and execution firm that provides liquidity and trade execution in equities, options, fixed income, and foreign exchange. It serves institutions and professional market participants across the U.S., Europe, and Asia-Pacific.

As of the end of June, the firm handled about 35% of U.S.-listed retail trading volume, according to reporting cited by Bloomberg. Its recent financial performance has been extraordinary: record Q2 trading revenue of roughly $7.3 billion, more than triple the year-earlier level, and net income of approximately $3.3 billion, up more than 250%. As a private company, its financial disclosures are less standardized and less independently detailed than those of a public issuer.

The firm is also pursuing international expansion, targeting Asian institutions for its 24-hour U.S.-equities trading service, seeking business from retail brokers, sovereign wealth funds, and asset managers. More than 20% of U.S. orders it executes for traditional retail platforms reportedly originate outside the United States—a sign of growing global demand for access to U.S. markets outside traditional trading hours.

Regulatory Headwinds and Market Structure Debate

Citadel Securities operates at the center of an active U.S. market-structure debate. In August, the firm urged the SEC to reconsider its proposal to eliminate the "order protection rule," a rule designed to prevent trades from executing at worse prices than displayed quotations on other venues. Citadel argued that eliminating the rule could encourage more internalization or off-exchange routing, potentially harm retail investors, and reduce public-market liquidity. The SEC's proposal argued that the rule adds cost and complexity.

That debate matters because Citadel Securities is a major handler of retail order flow. The central public-policy question is whether modern equity-market rules best preserve displayed-market liquidity, price competition, and execution quality for ordinary investors. A shift in the regulatory landscape could alter the economics of the market-making business, which in turn could affect the liquidity that firms like Citadel provide to the broader market.

The Outlook: Flows vs. Fundamentals

Short term, Rubner's base case is that the fading of September's forced selling, plus the return of corporate demand and seasonal retail inflows, produces a more favorable setup from October—initially in technology and then potentially across the market. He expects a potential recovery to begin in technology and AI-related shares before broadening.

But a durable advance would require earnings delivery rather than only favorable flows. The unusually high index weight of the largest 10 stocks means disappointing results or valuation pressure in mega-cap technology could disproportionately affect headline index returns. Key risks to the "reload" thesis include earnings disappointments or weaker guidance in the upcoming reporting season, inflation or interest-rate surprises that damage valuations, a broader reversal in AI investment expectations, election-related uncertainty, and continued market concentration.

The broader market debate has shifted from whether earnings are currently strong to whether the pace of profit expansion is sustainable. That makes the coming earnings season a key test of Rubner's more constructive Q4 view. For now, the strategist is betting that the technical and seasonal tailwinds will outweigh the fundamental concerns—at least through the end of the year.

Correction: An earlier version of this article misstated the percentage of U.S.-listed retail trading volume handled by Citadel Securities. It is approximately 35% as of the end of June.