August ended with markets continuing to move upwards and volatility to remain low. At the end of August, the S&P 500 completed the seventh consecutive positive month. The last time something similar happened was in 2018.

Then, the S&P 500 continued for a few months without direction, then corrected and then moved strongly upwards. According to the history of similar events, the S&P 500 tends to move strongly upwards in the coming months with gains reaching an average of 8%. In the current situation and with the indices having gone through an excellent summer, we are at the very moment when the worst month, in terms of seasonality, for the markets begins.
This is particularly important because if September offers a corrective move, then it will trigger purchases from both large investment funds and retail investors. The retail crowd has recorded an excellent last year in investing in the lower parts of the market.

The scenario for a positive fourth quarter remains high in our estimates as there is nothing that could reverse the macroeconomic outlook of the markets. What is worth noting is that in recent months, "easy money" has been absent from the market. In simple words, the funds which come from investors with little capital to be invested, and are placed in penny stocks or in trending shares of small capitalization. Primarily, the strong correction of Bitcoin in April and the small capitalization, resulted in a sharp decline in investment sentiment.

Bitcoin and low-capitalization stocks are the ones that create trending news and push investors, who have little capital, to invest en masse. In the chart below, you can see the movement of both Bitcoin and the small capitalization index. In our estimation, if there is a new upward movement, outside the areas we have noted, this will again lead to a massive inflow of small investors, will increase the positive investment sentiment and will push the big indices higher with more intense daily fluctuations.