Volatility was the name of the game in January, and retail traders went all-in on the action. Citadel Securities' Scott Rubner noted that activity among retail traders hit a record for January, with net stock inflows topping $350 million. Options inflows for the month also hit an all-time high above $300 million. "Retail activity in January was exceptional," wrote Rubner, the firm's head of equity and equity derivatives strategy. "Retail traders at Citadel Securities were net buyers of cash equities and directionally skewed better to buy in options each week so far this year." The S & P 500 notched a 1.4% gain in January, with traders weathering geopolitical, economic and trade fears. Many intraday drops were used by retail investors to buy the dip, helping the benchmark recover. This type of action signals mom-and-pop traders are going long on 2026. The question, however, is: Can they sustain this momentum? "Many of the themes that led in January are now extended and increasingly crowded, making them more sensitive to any moderation in flows or shifts in sentiment," wrote Rubner. "Historically, retail cash activity at Citadel Securities has tended to moderate from January into February, with seasonal patterns since 2017 showing a consistent decline in net notional following the early-year surge." Data from Bespoke Investment Group also shows there tends to be a February hangover on Wall Street. The S & P 500 has averaged a more than 1% advance in January since 1928. However, the benchmark typically sees a slight decline in February. One factor that could help the market avoid a February slump is earnings. This is the busiest week of the reporting period. Palantir is soaring after it posted better-than-expected profit Monday. "Magnificent Seven" members Alphabet and Amazon are due to report Wednesday and Thursday, respectively.
