I don’t love historical analogues in the market context. In a similar vein, I’m instinctually suspicious of seasonality.

To be sure, seasonals do matter. “N=100” is woefully wanting in most statistical contexts, but it’s a decent sample size as macro-market phenomena go. Same’s true of “n=50.” So, calendar-based patterns as observed on the S&P and the Nasdaq aren’t coincidences. There’s something there, and even if there wasn’t a long time ago, there is now because markets being entirely subject to our whims (they’re human constructs), our belief in a given seasonal can self-fulfill. That is: If we believe there’s a seasonal, we’ll be inclined to trade accordingly and that trading creates a pattern (a seasonal).

I bring that up because the seasonal turns bullish for US equities starting… well, starting today. But let the figure below serve as a cautionary tale: There are no guarantees.

The chart shows the S&P’s performance from October 27 through year-end for each year looking back a decade. 2018 sticks out.

If you’re old enough to remember Donald Trump’s first term, you remember how rough Q4 of 2018 was for markets. That December was the worst for the S&P since The Great Depression. Then, as now, the domestic political backdrop was defined by a government shutdown and rumors that Trump might try to fire Jerome Powell, who wasn’t even a year into his role as Fed Chair.

Note that the 2018/2019 shutdown would go on to become the longest in US history. It’s very likely the current shutdown will break that record. And while the monetary policy backdrop’s different (the Fed’s cutting now, they were still hiking then), there’s an argument to be made that they’ve waited too long to stop QT, a delay which could manifest in front-end funding pressures, particularly around the turn of the year. And Trump’s expected to name his pick to replace Powell by year-end, an event which could fan concerns about Fed independence if he goes with, say, Kevin Hassett. (I don’t think he will.)

Although China trade tensions are apparently set to abate, I’d remind readers that in 2018 there was a lot of back and forth on that front too — on-again, off-again tariffs, escalations followed by de-escalations, a face-to-face between Trump and Xi and so on. It was destabilizing.

With those caveats, if you go strictly by the seasonal, we’re looking at a potential blow-off top for stocks, which breezed through September’s bearish seasonal and quickly shook off a trade escalation on October 10 and a regional bank scare on October 16 to post new records.

The charts above are from Citadel’s Scott Rubner, who described himself as “still constructive” on stocks.

“A clear supply–demand imbalance persists in equities, with buyers positioned higher and underlying demand still intact,” he wrote, adding that the corporate bid’s set to return soon enough as companies roll out of the earnings blackout.

Speaking of earnings, tech results are obviously important, particularly at a time when positioning among discretionary investors (i.e., the “pros”) remains on the light side. Strong earnings from the mega-caps this week “could catalyze institutional re-engagement after a period of caution,” Rubner said.