Everybody’s Shopping for the Highs — however August–September is Already Executing the Reset

Did you actually overlook what
August–September does? The kill zone — August baits, September traps, and also you
is likely to be working out of time. This isn’t superstition or “seasonal weak spot.”
It’s a scheduled, mechanical portfolio reset — one which’s already in movement,
and it ends with a September hit.

This isn’t random seasonality — it’s
a deliberate portfolio reset constructed into the calendar.

September is the S&P
500’s weakest month, averaging –1.17% over the previous twenty years — and August
usually lays the entice.

In 2021, the market had
been grinding increased for months. VIX pinned to the ground, volumes lifeless — summer season
silence. A few hawkish Fed headlines, and September didn’t simply cool the
rally — it reduce via it, sparking compelled promoting and panic exits.

August 2023 was pure
euphoria. AI mania peaking, Nvidia at recent highs, Nasdaq screaming. Whereas
retail chased headlines, funds had been already unloading — not reacting, however
executing the plan. Two weeks into September, it was gone — Nvidia and Nasdaq
again to their place to begin, as if the rally by no means occurred.

Completely different years,
totally different triggers — identical playbook. The August–September drop isn’t a random
response — it’s the deliberate reset taking part in out on schedule. August masses the gun
— September pulls the set off.

Earnings Season: The Most Strategic Reviews of the 12 months

The timing of Q2
earnings — late July via mid-August — isn’t a coincidence. It’s the quilt
section of the reset. With books closed on June 30, firms drop their studies
proper as establishments begin reshaping portfolios for the ultimate fiscal stretch.
The tactic is easy: use sturdy studies as cowl to unload.

For
instance, on July 28, 2021, Meta smashed expectations — income $29.08B, +56%
YoY, web earnings doubled, earnings per
share (EPS) crushed forecasts and inventory popped 10% to a recent ATH at $385.

After which — the reversal.
By September 30, Meta was down almost 13% from that peak. Not as a result of the
report was dangerous — it was too good. The basics didn’t change. The
positioning did — the reset was underway. Peak sentiment, max retail FOMO, and
an open door to promote with out tanking your individual PnL. Robust beats turn into exit
home windows — and each one in all them is simply one other brick within the calendar-driven
repositioning basis that September will end constructing.

Why
it occurs

Each summer season, the
S&P 500 sinks into a neighborhood liquidity drought. Fifteen years of knowledge say the
identical factor: volumes dry up, order books skinny, and even modest trades are
hitting exhausting. Skinny books + low quantity aren’t an accident — they’re the right
cowl for the stealth section of the reset.

The VIX sits low right here,
peddling the phantasm of security — however that calm is a lie. Over the previous 4
years, volatility has exploded a mean of +71% from August’s quiet lows to late-September’s chaos – proper on
schedule. That spike isn’t panic — it’s the set off level of the quarter-end
unwind, when the stealth section flips into open execution.

August — The Setup Isn’t Breaking.
It’s Peaking.

August is when
institutional desks begin their strikes. They exit positions whereas costs are
nonetheless close to the highs, locking in earnings to e-book them within the present quarter.
The mission isn’t simply to become profitable — it’s to make the quarter-end snapshot
look good earlier than the storm they know they’ll assist set off.

SPX futures liquidity
runs 20–30% under common this month. Desks are half-staffed, threat managers are
on the seaside, and it solely takes one actual promote order to start out a slide. With VIX
close to the ground, nobody’s hedged — which is precisely how execs prefer it. They promote
into power whereas retail remains to be studying “resilient market” headlines, and
they’re gone earlier than the primary crack exhibits on the chart.

That’s why August hardly ever
implodes. It leaks — quietly. By the point September begins, the stealth section
of the reset is not preparation — it’s already in full movement.

September Hits More durable

By September, the reset
grew to become deliberate and aggressive. For a lot of US funds and companies, it’s not
simply quarter-end — it’s the fiscal year-end. Portfolios aren’t being
“adjusted,” they’re cleared for reporting functions. Earnings get locked in,
losers get reduce, and dangers are being diminished, so stability sheets look bulletproof
heading into This fall.

What seems like “random
promoting” is nothing of the type — it’s mandated portfolio resets tied to the
calendar. The ultimate section of the cycle is about look as a lot as
efficiency: managers wish to print sturdy returns, cover drawdowns, and stroll
into year-end with portfolios that look unshakable on paper. When hundreds of
funds do that concurrently, it amplifies each different September stressor —
skinny liquidity, buyback blackouts, and macro bombs ready on the calendar.

September: The Good Storm Window

The Mechanical Squeeze

September isn’t simply the
weakest month for equities — it’s when the market’s plumbing turns hostile.
First, the buyback blackout kills one of the dependable each day demand
engines. With out company bids absorbing provide, each promote order hits
tougher. Then triple witching slams in, forcing billions in choices and futures
flows via an order e-book already working on fumes. These will not be market
“occasions” — they’re pre-scheduled shocks baked into the reset.

Take a look at September’s
calendar — it isn’t random. The witching, CPI/PPI, FOMC: stack them up and also you
don’t see occasions, you see a firing sequence.

The Macro Detonators

Whereas the mechanical
stress remains to be rippling, the calendar drops its macro payload: CPI and PPI in
the identical week, a full FOMC assembly with Powell’s presser, and main index
rebalances that shove megacap weights round like cargo in a storm. On this
tape, even impartial Fed language can land like a hawkish bomb. Historical past is brutal
right here — in 2022, a single CPI beat erased $3 trillion in market cap inside three
weeks. However 2025 is about as much as be even harsher. This time, the whole market is
leaning on one assumption — that Powell will lastly pivot, that price cuts are
coming to save lots of the tape. If that reduction doesn’t arrive, the religion holding this
rally collectively cracks

Whenever you stack macro
bombs, mechanical flows, and no liquidity, you don’t get a dip — you get successful
that doesn’t pause so that you can react. Should you assume you’ll have time to regulate
when it begins, you’re already too late.

How
it seems in actual time

The tells aren’t hidden
— they’re screaming if the place to look.

●
Robust earnings, falling costs: A
firm crushes EPS and income, and the inventory sells off anyway. That’s not a
miss — that’s execs utilizing your bid to exit.

●
Weak names rallying: Laggards
all of the sudden lead, not as a result of fundamentals flipped, however as a result of funds are
rebalancing with out chasing stretched leaders.

VIX creeping up: The
tape seems calm within the mid-teens (14–15), however pretend breakouts and cease runs
multiply. First push via 16.5? That’s your early warning. Weekly shut
above 18.5? That’s regime change — “purchase the dip” flips to “promote the rip.”

In 2020, Tesla surged 74%
into late August forward of S&P inclusion, then dumped 34% in three weeks. In
2015, after China’s devaluation, the S&P fell 11% in ten days. The set off
headlines change. The reset mechanics don’t.

August–September: the setup is seen on the tape

Whereas
feeds are nonetheless cheering new highs, the chart tells a cleaner story. Worth is
stalling beneath 6,480–6,500 after a 16% run. The tape is stretched, VIX is
creeping off the ground, and the liquidity beneath you is paper-thin. The map is
already drawn: First — a September flush into the highlighted liquidity band at
5,900–6,000 as VIX pushes from 14–15 via 16.5 and towards 18.5–20. Then — a
reversal drive towards the 1.618 extension close to 7,100. This isn’t a random
correction — it’s the market’s quarterly reset taking part in out on schedule.

If the index breaks 6400
and closes the week beneath 6350 with VIX >16.5 (ideally ≥18.5), the wash
opens straight to 6150 → 6000–5900. That’s the shakeout.

If, after that sweep, value reclaims 6150–6300 whereas VIX drops again beneath 16,
the runway to 6600 and 7100 is evident.

Invalidation
is easy: a clear maintain above 6500 with VIX ≤15 skips the wash and squeezes
towards 6600 — however the base case into September is flush first, extension later.

Conclusion

Whereas
retail nonetheless treats this rally like an open barrier, the deliberate reset is
already in progress. The calm you see isn’t stability — it’s the pause earlier than
the blade drops. And when it does, it received’t miss.

If
you’re nonetheless lengthy with no plan, you’re not buying and selling — you’re volunteering as
somebody’s exit liquidity.