Russell 2000 Weekly Market Insights - Week of August 31st

# Weekly Market Analysis: Russell 2000 Outlook for the Week of August 31, 2025

Welcome back to the Hobbs Trades weekly newsletter! As your go-to market analyst here at [www.hobbstrades.com](http://www.hobbstrades.com), I'm diving into the Russell 2000 small-cap index as we head into the short trading week starting September 1, 2025. With Labor Day closing markets on Monday, expect a compressed four-day session packed with key economic data that could sway small-cap sentiment. The Russell 2000 closed the prior week on a slight dip, but broader trends suggest potential for a rebound amid softening labor signals and valuation appeal. Let's break it down.

## Recent Performance Recap

The Russell 2000 index wrapped up August on a mixed note, closing at 2,366.42 on August 29, 2025, down from 2,378.41 the day before. This represents a modest weekly pullback amid broader market consolidation, but small caps have shown resilience year-to-date. Despite some narratives of underperformance, the index is hovering near multi-month highs, buoyed by a July outperformance where the Russell 2000 edged out the Russell 1000 (2.68% vs. 2.59% total return).

Looking at monthly trends, small caps faced headwinds earlier in the summer, with the index down -1.8% through June. However, valuations remain attractive—a 21% discount to the S&P 500—positioning the Russell 2000 for potential leadership in 2025 if economic conditions stabilize. Recent X discussions echo bullish vibes, with traders eyeing breakouts to levels like 2,460 short-term and even 3,000 medium-term.

## Key Price Levels for Russell 2000 Futures (RTY)

RTY futures, which track the index, are trading in a consolidative range as we enter the new week. Current pricing aligns closely with the spot index around 2,366, but watch these technical levels for potential moves:

- **Support Levels**:

- Immediate: 2,359 (recent low from August 29).

- Next: 2,350–2,370 (confluence of recent swing lows and 14-day RSI support zones).

- Deeper: 2,300 (psychological round number and potential retracement if labor data disappoints).

- **Resistance Levels**:

- Immediate: 2,382–2,384 (prior highs from late August).

- Next: 2,386 (Elliott Wave target for ongoing impulse).

- Major: 2,477 (all-time high zone) and 2,525 (52-week high).

A breakout above 2,386 could signal stronger upside momentum, especially if tied to positive economic surprises. Conversely, a drop below 2,359 might test deeper supports amid risk-off flows.

## IWM ETF Options Chain Insights

The iShares Russell 2000 ETF (IWM), a popular vehicle for small-cap exposure, shows balanced but cautious options activity heading into the week. Focusing on the nearest weekly expiration (September 2, 2025—note: post-Labor Day, so limited time decay impact):

- **High Open Interest Calls** (Bullish Focus):

- Strike 240: 12,220 OI, volume 11,077, last price $0.03, IV 10.35%.

- Strike 235: 1,249 OI, volume 6,565, last price $1.12, IV 11.04%.

- Strike 234: 827 OI, volume 1,076, last price $1.79, IV 11.74%.

- **High Open Interest Puts** (Defensive Focus):

- Strike 232: 2,882 OI, volume 5,402, last price $0.16, IV 10.84%.

- Strike 233: 2,175 OI, volume 4,101, last price $0.29, IV 10.69%.

- Strike 231: 1,983 OI, volume 5,527, last price $0.08, IV 11.33%.

Implied volatility (IV) remains subdued, ranging 10–12% for at-the-money strikes, suggesting low expected volatility in the near term. Notable volume spikes at 240 calls and lower puts indicate hedging around current levels (IWM closed at ~235.17 on August 29). No extreme skew, but higher call volume could hint at upside bets if data beats expectations. For longer-term plays, monthly expirations weren't detailed, but watch for rollovers post-weekly expiry.

## Economic Events to Watch This Week

This week's calendar is labor-heavy, which could amplify small-cap volatility given their sensitivity to domestic economic health. Markets closed Monday for Labor Day—ironic timing! Key highlights:

- **Tuesday, September 2**: S&P PMI Final (9:45 ET), ISM Manufacturing (10:00 ET). Expect focus on manufacturing rebound signals.

- **Wednesday, September 3**: Job Openings (July, 10:00 ET), Factory Orders.

- **Thursday, September 4**: ADP Employment, Jobless Claims, ISM Services.

- **Friday, September 5**: Nonfarm Payrolls (August), Unemployment Rate. This is the big one—consensus expects softening, but a surprise could swing sentiment.

Global cues from China and Europe may also filter in, but U.S. data will dominate.

## Outlook for the Week

Short-term uncertainty persists with softer labor trends and fading small-cap premiums, but the Russell 2000's discount to large caps and historical post-recon strength position it well for 2025 gains—potentially 16–18% if averages hold. Bullish if we hold above 2,350 and break 2,386; bearish below that on weak jobs data. Options suggest traders are positioned for mild moves, so volatility could spike on surprises.

*Data as of August 30, 2025. Not financial advice—always do your own research.*