Hey, Ross here:
I’ve been digging through a lot of market data this week.
And the more I look, the less interested I am in making some big one-way call.
There are enough crosscurrents here that you have to be selective.
Take a look:
Chart of the Day
This chart compares discretionary investors with systematic strategies.
The discretionary crowd is sitting around the 45th percentile and slightly underweight stocks.
Plenty of room to add risk.
Systematic strategies are in a completely different place.
They’re up around the 82nd percentile and still overweight equities.
So the people making judgment calls have gotten cautious.
The rules-based algorithmic money hasn’t.
And September usually makes the human side even less aggressive:
According to Citadel, September has historically been the weakest month of the year for retail buying on its platform.
From 2017 through 2025, retail put less money to work in September than any other month.
Even the usual “buy the dip” crowd tends to back off.
On S&P 500 down days, September retail buying has historically run at roughly half the normal pace.
So two groups of buyers are either cautious already…
Or historically tend to become more cautious right about now.
That’s not exactly a great setup for broad, mindless buying.
But then you get this:
Most people look at the S&P 500 around 20 times forward earnings and stop there.
“Too expensive,” they say. Maybe.
But look at the bottom panel.
The implied five-year earnings growth rate has climbed to roughly 25%.
That’s the highest reading on this chart going back to 1995.
And once you account for that growth, the S&P 500’s PEG ratio drops below 1.
That doesn’t mean stocks are cheap.
Those earnings still have to materialize.
But put all three charts together and you get a pretty unusual market.
Discretionary investors are holding back.
Retail buying tends to dry up right about now.
Yet systematic strategies are still heavily exposed…
And underneath the market, earnings expectations remain about as strong as we’ve seen in decades.
So there are legitimate reasons to be cautious here.
But there’s also a lot more support underneath this market than the usual September doom-and-gloom would have you believe.
That leaves us with a market where choosing the easy conclusions can be an expensive mistake.
And it changes the way I’m trading it right now.
Insight of the Day
This is not a market where you can go on “autopilot”.
A market like this doesn’t have to resolve with the S&P suddenly ripping 10% higher or falling apart.
There’s another, much more likely possibility.
It can just shuffle the money around.
Systematic funds keep buying what their models tell them to buy.
Discretionary managers cut exposure in areas they don’t trust.
Retail slows down.
Meanwhile, strong earnings keep money flowing into companies that are still delivering.
The index might barely move through all of that.
But underneath it, one sector can rip while another gets hammered.
One stock can push to new highs while another sitting right beside it breaks support.
That’s the kind of tape where staring at the index all day can actually leave you behind.
That’s why I want to know where the buying is winning.
Which sectors are gaining ground against the market.
Which stocks keep pushing higher even when their peers stall.
And where money starts rotating when the old leaders cool off.
Because if September stays messy – and it looks like it will…
We don’t need the entire market to cooperate.
We just need to be looking in the right places.
P.S. In fact, I think now might be a good time to start buying. I explain why – including two stocks I’m buying right now – in my latest YouTube video here.
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Thank you guys. Will talk again soon.”
Ross Givens
Editor, Stock Surge Daily
