by Jason Bodner
September 9, 2025
We’ve all heard the pilot say something like this. “Fasten your seat belts, folks. Things might get bumpy.”
Don’t worry when your flight shakes you up a bit. Airplanes are built to withstand a level of turbulence far greater than we might imagine. The wings of a modern jet can bend 30-feet without breaking, flexing with the wind like a bird’s feathers. So, when the cabin rattles and drinks spill, the plane will keep flying.
Markets are not so different. Volatility may feel terrifying in the moment, but beneath the surface lies a firm structure and resilience. And just like seasoned pilots know that air-turbulence is normal on certain routes, seasoned investors know that the route through September often brings added market turmoil.
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
Since 1990, September has been the weakest-month for stocks. That fact can unnerve investors already conditioned by gloomy headlines. Negative seasonality layered on top of scary news can spook even the steadiest hand. But when we strip away fear and look at the data, this September is off to a hot start.
As the monthly data reveals (above), August also has a weak seasonal profile, yet the S&P 500 gained nearly 2% in August. Those gains nudged the Big Money Index higher, from a low of 66.2 to 68.9.
While the latest BMI rise looks meager, its meaning is important: inflows are outpacing outflows on a 25-day rolling basis. The BMI is a great gauge of institutional activity. A rising BMI means greater demand.
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
Even in August, a month that “should” have been weak, institutions stepped up to buy more stocks. That means the underlying currents don’t support the media’s incessant narrative of rising dangers.
Mapping Outflows vs. Inflows
So far, September’s picture sharpens when we drill down into money flows. Outflows over the past three-sessions averaged 42 per day, well below the 20-year average of 50. By comparison, inflows averaged 97 per day, far above the 20-year average of 65. That’s net lift, not greater turbulence.
Here’s another encouraging detail: ETFs are showing no net outflows. This matters because large asset managers use ETFs as instruments for exposure to markets, sectors, or investing themes. When ETFs register sharp outflows, it signals broad-based risk reduction, while absences of outflow suggest money managers are not dumping anything meaningful. Put simply, no one is reaching for the eject handle.
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
Market Cap and Risk Appetite
Looking at money flows by market cap since August 1st, we see healthy action. Eighty-seven percent of inflows have gone into small-caps and mid-caps, with inflows outnumbering outflows by two to one.
Historically, when capital moves into these higher-beta segments, it reflects confidence and appetite for risk. This is not defensive-posturing, it is growth-seeking behavior.
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
This alone contradicts history, which says September must be weak. The flows are saying the opposite.
Sector Flows Confirm the Story
In the past week, 76% of inflows were concentrated in Healthcare, Technology, Materials, Discretionary, and Financials. Outflows, small as they were, came from Staples and Real Estate – defensive havens. When investors embrace risk-on sectors and avoid defensive-sectors, it speaks of optimism, not fear.
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
Sector rankings echo this tale. Industrials sit atop the list, followed by Financials, Technology and Discretionary. Industrials reflect strength in infrastructure. Financials benefit from falling rates, with cheaper credit spurring M&A activity, IPOs and lending. Technology and Discretionary, my preferred yardsticks for economic strength, represent innovation and consumer confidence. When these rank high, bull-markets strengthen.
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
Sector ETFs mirror this bullish backdrop. Health Care looks poised for a breakout, with the SPDR Biotech ETF (XBI) showing early sparks of recovery.
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
Industrials, Technology, and Discretionary are at or near highs. Energy remains range-bound, with oil at $63.35 per barrel – in the lower end of its six-month range. Staples, meanwhile, have drifted sideways for half a year. These divergences illustrate an economy tilting toward growth, not retreat.
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
This isn’t the first time sentiment and reality have diverged. In August 2010, headlines screamed of a “double-dip recession,” yet the data quietly showed spending stabilizing and flows moving into growth sectors. Stocks rallied more than 25% over the next year. In September 2016, fears of a rate hike sent markets reeling, only for the S&P to finish the year strong. History teaches a simple lesson: Perception often overshadows reality in the short term, but money flows reveal where the confidence truly lies.
Let’s summarize…
September comes carrying baggage of negative headlines, seasonal weakness, and global uncertainty. Yet the hard data – a rising BMI, inflows dominating outflows, ETFs holding steady, small-caps and mid-caps attracting capital, and growth-sectors leading – all argue that the market is sturdy. Add to this backdrop an excellent earnings season, and you have a good case for more gains. FactSet recently reported that 81% of reporting S&P 500 companies beat sales and earnings expectations. Even where guidance was murky, the market’s reaction was saying dips were shallow, buying emerged, and selling pressure never took hold.
In other words, this airplane’s wings are flexing exactly as they should.
Anyone who has flown through turbulence knows the stomach-churning feeling, even as the crew calmly serve drinks or walk the aisles. Experience teaches us that what feels dangerous is often routine.
Investors should heed the same lesson. What shakes us emotionally rarely damages us financially, provided we stay disciplined and consider facts over fears. September has a reputation for weakness, and negative headlines will (always) continue pouring in. But the current data isn’t fragile; it is constructive. Markets are absorbing shocks, channeling flows into growth, and showing resilience in the face of doubt.
September is supposed to be the market’s roughest ride. But so far, the air is smoother than history would have us believe. Beneath the rattling daily headlines, investment currents are healthy signaling expansion.
Riding markets, like riding planes, means some inevitable turbulence. But the wings are strong and working how they should, so relax and enjoy the ride. As Marcus Aurelius wisely wrote: “Today I escaped anxiety. Or no, I discarded it, because it was within me, in my own perceptions, not outside.”
All content above represents the opinion of Jason Bodner of Navellier & Associates, Inc.
Also In This Issue
A Look Ahead by Louis Navellier
Last Week’s Jobs Data Lifted Most Major Markets
Income Mail by Bryan Perry
Digesting Slack Labor Markets and AI Amid Record Gold and Stock Prices
Growth Mail by Gary Alexander
Black Swans Often Fly in September
Global Mail by Ivan Martchev
What September’s Low Market Volatility Means
Sector Spotlight by Jason Bodner
September May Surprise Us – Just Like August Did
View Full Archive
Read Past Issues Here
Jason Bodner
MARKETMAIL EDITOR FOR SECTOR SPOTLIGHT
Jason Bodner writes Sector Spotlight in the weekly Marketmail publication and has authored several white papers for the company. He is also Co-Founder of Macro Analytics for Professionals which produces proprietary equity accumulation and distribution research for its clients. Previously, Mr. Bodner served as Director of European Equity Derivatives for Cantor Fitzgerald Europe in London, then moved to the role of Head of Equity Derivatives North America for the same company in New York. He also served as S.V.P. Equity Derivatives for Jefferies, LLC. He received a B.S. in business administration in 1996, with honors, from Skidmore College as a member of the Periclean Honors Society. All content of “Sector Spotlight” represents the opinion of Jason Bodner
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