According to BTIG, August marked a significant month for the iShares Russell 2000 ETF (IWM), which rose at least 4% and reached an all-time high, yet closed the month with less than a 1% gain. This pattern has occurred only five times previously, with each instance followed by an average decline of 13.57% over the next four months.
The firm highlights that the current environment remains negative for risk, particularly as 10-year Treasury yields have reached new cycle highs above 4.75%. Additionally, the likelihood of a rate hike in September has increased to 65%, which is among the highest probabilities seen this year.
Historically, September has been the worst month for small-cap stocks, with an average decline of 1.51% over the past 25 years. BTIG emphasizes the need for caution as the market faces several unresolved issues heading into the fall