There has never been a sustained unilateral strong market trend in September-October of any midterm election year. The only difference lies in the magnitude of the pullback. When the market is stable, there’s a mild correction of 3%-8%. When the market is fragile and under macro pressure, there can be a deep, phase-specific pullback of over 15%. Many retail investors wonder: why is it that during September and October of midterm election years, market volatility systematically increases? Breaking it down into two core underlying logics—both are macro principles widely agreed upon by institutions, with no subjective speculation: 1. Policy uncertainty premium during midterm elections. The U.S. midterm elections reshape the power dynamics in Congress, directly influencing the direction of fiscal policy, industrial policy, regulatory policy, and trade policy. Before the results are finalized, the entire market operates in a policy vacuum. All major institutions and long-term funds proactively reduce risk exposure, lower their positions, and avoid aggressive bets. This collective risk aversion by capital directly weakens bullish momentum in the market, making volatility and pullbacks a temporary norm. 2. The widely recognized seasonal weakness of U.S. stocks in September. In over a century of seasonal statistics for U.S. stocks, September has the worst average returns and the highest probability of negative returns. This is driven by a very fixed institutional behavior cycle: During the summer, institutions take vacations, and trading activity is light, with many risks temporarily shelved. Come September, institutions return in full force, initiating concentrated portfolio adjustments, quarterly rebalancing, and annual review-driven reallocations, all while overlapping with the redemption windows for public and private funds. The combined forces of concentrated selling pressure, portfolio rebalancing, and risk repricing naturally suppress market trends.