Former Goldman Sachs renowned strategist: US stocks can rise for another month! It is not advisable to short before the end of September

Former Goldman Sachs strategist Scott Rubner is bullish on U.S. stocks, particularly in the technology, software, and AI innovation sectors.

According to Wind Trading Desk, Scott Rubner, a former star strategist at Goldman Sachs who accurately predicted two major corrections in U.S. stocks, expressed an optimistic outlook for the U.S. stock market in his first market report after moving to Citadel Investment.

Rubner stated in his latest report that he is optimistic about the U.S. stock market, especially in the technology, software, and AI innovation sectors. He pointed out that retail investors have net bought stocks for 14 consecutive trading days, setting the longest buying record since December last year. At the same time, institutional investors' positions have not been excessively stretched, leaving room for further increases.

Rubner expects the market to exhibit a "high first, then low" pattern, driven by positive seasonal factors, strong capital flows, sustained retail support, corporate buybacks, and the eventual buying by fundamental investors, with the market likely to rebound further in the coming weeks, and the uptrend may continue until September.

Public information shows that Scott Rubner worked at Goldman Sachs for nearly a decade, serving as the Global Markets Managing Director and Tactical Specialist before leaving. He has focused on capital flow research for over 20 years and is known on Wall Street for his precise market timing judgments.

In the past year, Rubner successfully predicted two significant adjustments in U.S. stocks. At the end of June last year, when the S&P 500 index was hitting new highs, he accurately predicted that U.S. stocks would decline by the end of summer. On February 19 of this year, the day the S&P 500 index set a new historical high, he again warned that the momentum of retail and institutional capital was fading, and subsequently, the index fell by a cumulative 8.6%, while the Nasdaq 100 index plunged 12% into a technical correction.

The following is a full translation of the report:

Global Market Intelligence (GMI) | August Outlook

I’m back!

I look forward to working with you again, and thank you for your support!

Since joining Citadel Securities, I have received numerous inquiries from clients about the same daily market question: "Is it time to sell the stock market rebound?" My answer is: "We are not at that time yet."

The "buying on dips" behavior of retail investors in stocks and options represents an important dynamic in the U.S. stock market. Low institutional holdings and the return of corporate buybacks are significant technical factors in the market. I describe the current situation in baseball terms—it's the seventh inning of a nine-inning game. If earnings barely meet expectations and the stock market continues to rise, institutional investors may fear "significantly underperforming the benchmark" (FOMU).

For the coming month, I am optimistic about the U.S. stock market, primarily driven by fundamental earnings and positive capital flow dynamics. I believe the market will continue to rise in the coming weeks, as U.S. companies may exceed lower earnings expectations (according to Haver data, Q2/Q2 year-on-year growth of +4%), along with the positive translation effect brought by a weaker dollar, especially for the U.S. technology sector. This presents a lower threshold for those "fundamental investors" waiting for these earnings reports to be "forced to enter the market." In mid-August, I suggested that investors increase index hedging for the end of September. This can take advantage of lower implied volatility to hedge against any macro events. September 2nd (after Labor Day) is typically the highest point of the month over the past 100 years.

The seasonal factors in July are very favorable for U.S. stocks. Since 1928, July has been the best-performing month of the year for the S&P 500 index, while September is the worst-performing month as investors "return to school." The S&P 500 index is expected to achieve its 11th consecutive month of gains in July. Citadel Securities' summer trading activity aligns with a significant increase in stock demand, while other investors have stayed away from their trading terminals.

Citadel Securities: S&P 500 Monthly Returns (Since 1928)

It's time to start the discussion.

Retail Position Analysis

1. Citadel Securities' retail trading flow has seen net buying of stocks for 14 consecutive trading days, as the stock market approaches historical highs. This is the longest daily retail buying cycle since December 2024, lasting 16 days.

The S&P 500 index fell a few basis points yesterday, but we experienced the largest single-day buying skew since April 10th.

In the summer liquidity environment, there is a competition for "buying the dip alpha"—who can buy the dip the fastest.

Retail Cash Stocks—Net Nominal Amount Calculated Weekly

Standard Deviation January-July 2025

1. Citadel Securities' retail trading flow has been net buying for 11 out of the past 13 weeks (since early April).

2. Citadel Securities experienced the largest single-day outflow of retail trading on Liberation Day, April 7th (as well as outflows on April 4th). This is also one of the largest two-day selling skews we have seen. Since April, retail investors have remained resilient and fully engaged in this round of rebound.

3. Citadel Securities' retail trading flow remained strong during the summer months (especially June and July) and then declined in September. Retail traders deployed the largest amount of funds in July over the past two years, and 2025 is no exception.

Retail Cash—Net Nominal Amount Proportion by Month

January 2023 - December 2024

5. Citadel Securities estimates that retail investors currently account for 20% of the total market trading volume. In May 2025, this reached its highest level since February 2021 (24%), due to increased and widespread participation, particularly in low-priced stocks.

Retail investors are more inclined to purchase artificial intelligence, high volatility, cryptocurrencies, IPOs, leveraged ETFs, and contrarian stocks.

Percentage of retail activity in overall market trading share

January 2018 - July 2025

1. Citadel Securities has created various methods to help monitor the performance of popular retail trading based on the overall retail flow of our clients. Colleague Tom Sozzi has excellent insights in his "Retail Roster." We look at this issue from three aspects: the top 30 buys by clients, the top 30 sells by clients, and the top 30 long-short pairs. These names are filtered to remove ETF securities (considering that retail clients typically buy and hold ETFs) and are reconstructed monthly using a daily equal-weighted index.

Institutional Holdings and Technical Aspects

1. Volatility technicals are improving:

Systematic holdings have recently increased, but there is still room for growth due to the decline in actual volatility.

The skew and term structure volatility indicators continue to normalize, with systematic strategies having potential ammunition in the coming month. Volatility is no longer the coach guiding the game from the sidelines but rather the star quarterback focused on the center.

1. Volatility Control Strategies

Volatility-targeted strategies continue to increase equity risk exposure as the high actual volatility period in April continues to fade from the indicators. Volatility control strategies with a daily risk target of 10% equity exposure are currently 35% lower than the peak in August, which typically sees slower seasonal entry. The 3-month actual volatility is 26.64, still high compared to the 10-day actual volatility of 8.47 and the 30-day actual volatility of 9.54.

1. Risk Parity Strategies

Risk parity strategies also draw inputs from the longer-term actual volatility market. We estimate that the equity exposure of risk parity strategies is also lower compared to historical context. The spot/volatility correlation continues to normalize across assets, as measured in our portfolio (comprising equities, government bonds, crude oil, and gold)

Source: Citadel Securities, as of July 16, 2025. Data is for illustrative purposes only. Past performance does not guarantee future results.

1. U.S. and Global Commodity Trading Advisors (CTA) Positions

Global CTA positions are not overly stretched. CTA trend-following strategies have been increasing exposure during this recent rally, but the exposure does not seem extreme.

1. CTA Trigger Threshold Levels (S&P 500 and Nasdaq 100 Futures)

CTA key trigger levels: Citadel Securities macro strategy team Grant Wilder estimates that the ES1 "trigger" level is 6003, while the current spot is 6280, and the NQA "trigger" level is 21861, while the current spot is 23006. There is a considerable distance between the current spot and the mid-term threshold levels at which these strategies would be forced to turn to short positions.

1. Futures Positions

Reported institutional futures positions for commercial, non-commercial, and non-reported entities remain stable.

1. Investor Sentiment

Based on conversations with institutional investors over the past few weeks, sentiment is not extreme. AAIIBULL (week-on-week decrease) and AAIIBEAR (week-on-week increase) also confirm this.

Corporate Buybacks and Options Dynamics

1. Return of Corporate Buybacks

Today marks the peak of the U.S. corporate earnings quiet period. U.S. companies will begin to emerge from the quiet window starting this week. Most of the S&P 500 market capitalization will report before August 1.

U.S. companies are expected to buy back $1 trillion worth of stock in 2025, maintaining their position as the largest buyers of U.S. stocks. August is typically an active month for corporate cash flows As my partner and macro colleague Nohshad Shah pointed out in his excellent weekly macro thoughts article, the earnings threshold this quarter is quite low. August is one of the best months of the year for corporate stock buybacks. This market dynamic has increased passive VWAP demand for large U.S. corporations.

S&P Earnings Expectations

1. Retail options trading flow at Citadel Securities has seen a net buying of call options for 11 consecutive weeks, and has been deploying call flow weekly since the market low in April. The most recent streak occurred in November 2023, when the stock market significantly outperformed the broader market.

Retail Options - Weekly Put/Call Direction Ratio

January to July 2025

1. In the history of our dataset (since January 2020), there have only been 6 instances where call options have been consecutively held for 11 weeks or longer.

Longest Recorded Weekly Consecutive Buying of Retail Options

1. The average duration of the previous 6 consecutive call options was 18 weeks, indicating that potential bullish "YOLO" call option demand may further increase. This implies demand for the next 7 weeks. During this period, the premiums collected have significantly increased.

My colleague Allie Becher has excellent insights on this topic and other retail flow themes in her "Retail Details."

1. Retail options trading flow at Citadel Securities remained strong during the summer months and then declined in September. Call option activity began to change the gamma distribution of the market.

If the S&P 500 index rises through the current spot, index market makers may become short on rising call options and exhibit short gamma exposure. Long index gamma has been a market buffering characteristic of this rally, but this could change if fundamental investors start hedging right-tail earnings events. Additionally, leveraged ETF activity in options and stocks has contributed to a synthetic short gamma in the market.

Retail Options - Monthly Contract Volume Ratio

January 2020 - June 2025

1. Citadel Securities' summer client stock cash and call option activity tends to be highly correlated with my heat maps. You will see more of my insights on this topic before entering the fourth quarter Citadel Securities: S&P 500 Daily Return Heatmap (Since 1928)

Citadel Securities: Nasdaq 100 Daily Return Heatmap (Since 1985)

1. Institutional investors at Citadel are more inclined to buy downside hedges.

The institutional options flow at Citadel Securities has been bearish for 8 out of the past 11 weeks, indicating an increase in hedging demand at the index level.

The institutional options flow at Citadel Securities aligns with the overall positions of actual cash investors.

Institutional Options - Weekly Put/Call Direction Ratio

January - July 2025

Market Direction Summary

1. I am optimistic about the U.S. stock market for the next month, primarily driven by U.S. technology, software, and AI innovators. The "Super Bowl" of second-quarter earnings begins this week, which may force institutional investors back into the market and into their favorite concentrated core positions.

2. The feeling of "high first, then low" - I believe the stock market can further rebound from here, driven by positive seasonal factors, strong capital flows, continued retail support, corporate buybacks, and eventual buying from fundamental investors.

3. I would recommend hedging for the end of September, as systemic investors become saturated and investors prepare to slow down ahead of a significant fourth quarter