The market’s pre-trading a challenging seasonal that normally waits until the back-half of September to bite.

That’s according to Goldman’s Scott Rubner who, by his own account on Wednesday, was “pinged more times in the past 48 hours asking for technical market updates” than at any other time this year.

The most common question from clients was simply this: Why’s September so damn challenging for equities? If you’re Rubner, the answer’s the same as it is for all other questions, market-related and otherwise. It’s about flows. Everything’s about fund flows.

The simple figure below shows you the seasonal.

If past is precedent, we’re just a few days out from the onset of the September curse. Somewhat ominously, nearly 100 years of history says the road starts to gets bumpy on September 6, the day US nonfarm payrolls are due.

“We are seeing clients get ahead of negative market technicals sooner rather than waiting for mid-month,” Rubner said, citing a number of factors, including a possible end to the systematic re-leveraging which helped bolster stocks in August.

Any more sessions like Tuesday’s vol shock could hamper whatever’s left of the re-allocation bid from vol control funds, which adjust exposure up or down based on historical vol. On Rubner’s estimates, systematic length has “fully recovered.” CTAs will be sellers both in a down tape and a flat tape over the next week and month, he said, adding that vol control strats have “significantly re-levered” since August 5.

The corporate bid’s still in play for another several sessions, but after that, buybacks will fade as the window closes. So far in 2024, authorizations exceed $890 billion, a record, on Goldman’s math. Corporates are the largest source of equity demand, and that bid will dissipate by more than a third once the earnings blackout sets in on September 13.

“This week is peak open-window for corporates,” Rubner said. “The corporate buyback bid remains robust, but will start to wane” in less than two weeks.

In addition, Rubner noted that pensions are now funded to the tune of 103%. They’re likely to cut stock exposure. “We have consistently seen pension funds reduce equity risk and immunize liabilities while moving into investment grade credit,” he wrote.

And then there’s seasonal selling by active mutual funds, nearly a quarter of which end their fiscal year in October. That could “already be affecting” prices via tax-loss selling and profit-taking, Rubner suggested.

In the end, Scott still sees the S&P hitting new highs around 6,000 by year-end. In the near-term, though, September’s traditional back-half weakness may get “pre-traded,” and any nascent equity pullback “may start to get traction if payrolls are weak on Friday.”