Citadel Securities Strategist: September Was the Reset, Q4 Is the Reload

Scott Rubner, head of equity and equity-derivatives strategy at Citadel Securities, is telling investors to buy the fourth quarter — and to use any October dip as an entry point. His case rests on three drivers: surging earnings estimates, a seasonal turn, and the return of the market's biggest buyers after a September washout.

The call comes after a frustrating stretch. The S&P 500 gained just 2% in the third quarter, churning beneath its surface while retail activity cooled and algorithmic funds sold. Rubner argues that churn did the market a service: investor equity exposure and leverage dipped, and valuations compressed.

"Now the setup begins to change," Rubner wrote in a note published Thursday. "September was the reset. Q4 is the reload."

Earnings reassert control

The first pillar is corporate earnings. S&P 500 third-quarter earnings-per-share estimates have risen 2.2% over the past two months, against a median 1.9% decline over the same pre-earnings window since 2000, according to Rubner. Consensus now points to 27% year-over-year EPS growth in Q3, following 20% growth in Q1 and 32% in Q2 — both of which beat expectations at the time.

"The story in 2026 has not been a low bar. Expectations have moved higher, and companies have continued to clear them by a wide margin," Rubner says.

The sideways market has combined with rising earnings to compress valuations. The S&P 500 trades at 19 times forward earnings, 15% below its 2026 high and essentially in line with its 10-year average. The pullback in technology valuations is even steeper.

Earnings season, Rubner adds, should return the spotlight to individual companies. "Oil, rates, and geopolitics dominated the conversation in September. Earnings and company-specific fundamentals are about to take back the calendar."

The calendar turns

The second driver is seasonality. Since 1930, the S&P 500 has gained an average of 5.6% in Q4 during midterm years, nearly twice the 2.9% average across all years. The path may be bumpy: in 14 of the 23 midterm years since 1930, the Q4 low was touched in October. From those lows, the median rally into year-end has been 10%.

"A constructive Q4 setup does not necessarily mean a clean start to October. Historically, October has often provided the volatility and the entry point before the stronger part of the year-end move," Rubner says.

The buyers return

Rubner calls the third driver the most important right now: the market's largest marginal buyers are coming back with room to add.

Corporations are mostly in earnings blackout periods, but the buyback window begins to reopen on Oct. 15. "From there, the corporate bid should build through earnings season and accelerate into November, historically the strongest month of the year for corporate buyback executions," Rubner says.

Retail investors are also positioned to step back in. Their cash activity has increased from September to October in each of the last four years, by an average of about 8%, while options activity has risen in each of the last three, by an average of about 15%, according to Rubner.

Systematic traders — funds running computerized, quantitative strategies — have cut equity exposure notably. Their positioning now sits in the bottom fifth of its range since 2024 and below neutral for the first time since April.

"September took leverage and positioning out. Q4 brings earnings, catalysts, and buyers back in," Rubner concludes. If dips come, "we would use that weakness to add to core longs, with a preference for single names where positioning has reset and earnings can drive the next move."

Citadel Securities executes approximately 35% of all U.S.-listed retail volume, making it the largest market maker by share — a vantage point that gives Rubner a real-time read on the flows he says are about to reverse.