Citadel Securities: Post-Election Clarity Opens a Clear Year-End Upside Path for U.S. Stocks
nashnova research
Citadel Securities strategist Scott Rubner argues that fading election uncertainty, combined with 22 straight days of retail net buying totaling nearly $33 billion, sets up a path of least resistance higher — though whether AI capex delivers returns remains the key open question.
Why did the market exhale the moment the election ended?
The S&P 500 rose 1.7% intraday on election day; all three major indexes closed higher.
Before that, the Nasdaq 100 had fallen 10% from its early-October peak — its third technical correction (a drop of 10%+ from a recent high) this year.
This means → The election result didn't bring new good news. It removed uncertainty sitting on valuations — the market was buying "clarity," not "upside."
Retail investors bought for 22 straight days — what does that signal?
Since October 5, retail investors have been net buyers of US equities for 22 consecutive trading days, totaling nearly $33 billion — the sixth-longest and fifth-largest such streak since 2017.
Daily buying averaged roughly $1.5 billion, about 1.4× the prior-year daily average; on down days for the index, buying ran 7% above average.
In plain terms = Retail wasn't chasing a rally — they were buying the dips. That's a different script from the usual "retail piles in at the top," and it suggests stronger conviction this time.
Buybacks and systematic funds — how much dry powder is left?
Q3 earnings blackout windows are lifting. By election day, roughly two-thirds of S&P 500 market cap was eligible to buy back shares; by November 9, that should reach 85%.
New buyback authorizations this year have hit $1.5 trillion, already surpassing the full-year 2025 record.
CTA positioning — commodity trading advisors, trend-following systematic funds — in US equities has dropped to its lowest since March 31. This means → If stocks rise, these funds have significant room to add exposure mechanically — not because they turned bullish, but because their models follow the trend.
Why does falling volatility count as a tailwind?
The VIX — the CBOE volatility index, a gauge of market fear — briefly topped 21, yet the S&P 500's one-month realized volatility stayed below 11.
In plain terms = The market *felt* scared, but *actually moved* very little. The gap between the two is the implied-volatility premium.
This means → If implied volatility drops once the election and earnings season pass, volatility-targeting strategies will automatically increase equity exposure, creating yet another layer of buying.
What does the historical record say?
Since 1950, the fourth quarter of a midterm-election year has been the strongest quarter in the presidential cycle, with the S&P 500 averaging a 5.6% gain — well above the 2.9% all-year average.
The Nasdaq 100 has averaged nearly 5% in November of midterm years, and since 2002 has outperformed the S&P 500 in every 12-month period following a midterm election, by roughly 10 percentage points on average.
This reflects a systematic rebound in risk appetite once midterm policy uncertainty drops — and tech stocks, with their higher beta, have historically benefited most.
What is the biggest unresolved question?
Whether all these buying forces — retail, buybacks, CTAs, vol-targeting funds — actually converge depends on one thing: Can the massive AI infrastructure capex deliver enough returns in upcoming earnings?
That is the same doubt that has weighed on Nasdaq valuations since October: the money has been spent, but the profits haven't caught up.
In plain terms = The structural buying "ammunition" is loaded, but the trigger condition is that market confidence in AI's return on investment doesn't keep deteriorating.
市场有风险，内容仅供研究参考，不构成投资建议。