Why October will be more treat than trick for investors

Data: Financial Modeling Prep; Chart: Axios VisualsFor investors, it's the most wonderful time of the year: the fourth quarter, historically the best performing period of the year for stocks.Why it matters: After a 13% rally year-to-date, history suggests that stocks have more room to run. By the numbers: Wall Street gets excited about the final quarter of the year for good reason. Going back to 1950, the final quarter has been positive for stocks 80% of the time, with an average gain of 4.2%, according to Carson group. That's nearly double the second highest performing quarter of the year —the first quarter — which has an average gain of 2.2%. And: Historic early weakness in fall didn't materialize this year: the S&P 500 closed September up on the month, marking its fifth month of gains. What they're saying: "The market has blatantly ignored the seasonal weakness we've historically seen during August and September," wrote J.C. Parets, chartered market technician and founder of TrendLabs. "This is probably the most bullish part of it all." Stocks just defied historic weakness. For Parets, that's a bullish signal. Yes, but: For other investors, that's a sign of this market's biggest potential headwind: complacency. "It is hard to argue with a bull market that is making new highs and is powered by cyclical leadership. However, recent overbought conditions paired with diverging market breadth suggest this melt-up could be due for some cooling off," George Smith, portfolio strategist for LPL Financial, wrote in a note.Yet even Smith reminded investors to buy the dip when the opportunity presents itself, adding the setup heading into October is more treat than trick this year.Between the lines: Equities keep rising regardless of the market risks, including but not limited to: Evolving tariffs.Weakness in the labor market.Slowing earnings growth for Big Tech, which is driving the majority of earnings growth.Valuations (oh, and, that circular funding from AI firms? Wall Street isn't worried! That funding will turn into earnings growth!) The bottom line: As strategists keep warning of volatility, stocks keep climbing. Portfolio managers who have to beat the S&P can't afford to stay out of the market, even if the continued rally starts to be justified by technicals more than fundamentals.

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