Bullish Trend, Cautious Outlook

*Analyzing the markets with Richie Naso, a Wall Street veteran of over 40 years and former member of the NYSE.

Dow Jones Industrial Average

The Dow had a weak week, falling approximately 0.6% and closing Friday at 53,732, down 108 points (-0.2%). The Dow’s relative weakness suggests market leadership continues to favor growth, technology, and smaller-cap stocks rather than the more defensive Dow components.

• Friday’s decline was driven partly by a weaker-than-expected July retail sales report (-0.6%), along with higher oil prices and rising Treasury yields.(Source: WSJ)
  

S&P 500

The S&P 500 had another positive week, gaining about 0.4% and extending its winning streak to three consecutive weeks. It finished Friday at 7,785.76, down 0.2% on the day after reaching another record high earlier in the week.(Source: Schwab)

• The S&P reached a new all-time high Thursday, helped by technology and AI stocks along with lower oil prices and yields.
• Friday brought some profit-taking as retail sales unexpectedly declined while oil and Treasury yields moved higher.(Source: Eurasia Business)
  

Nasdaq

The Nasdaq Composite gained about 0.1% for the week, closing Friday at 26,729.16 — its third consecutive weekly gain, although Friday’s 0.3% decline trimmed the advance.(Source: AP News)

The Nasdaq’s flat weekly performance masks some important underlying strength. Technology and AI-related stocks remained the primary engine, but rising oil prices and Treasury yields created selling pressure toward the end of the week. The 10-year Treasury yield finished around 4.70%, while Brent crude jumped nearly 6% for the week.(Source: MarketWatch)

Russell 2000

The Russell 2000 was one of the strongest parts of the market this week, gaining approximately 1.1% and closing Friday at 3,068.42 — another record high. YTD the Russell 2000 is up 23.6%, substantially ahead of the S&P 500’s 13.7%. IWM finished Friday around $305, also at the top of its 52-week range.(Source: AP News / BlackRock)

Richie’s read: Very bullish signal for market breadth.

The Russell isn’t just participating — it is outperforming the major large-cap indexes. That tells me investors are willing to take on more risk and are moving beyond the mega-cap technology trade.

HYG — Junk Bond Watch

HYG was essentially flat this week, finishing Friday at around $79.71. It is holding near the upper part of its 52-week range of $78.63–$81.18, which is constructive given the backdrop of rising Treasury yields.(Source: BlackRock)

Richie’s read: Constructive, but not particularly strong.

CBOE Volatility Index: No Fear

The S&P 500 rose for a third consecutive week, though the index finished down 0.2% on Friday. The VIX — the market’s fear gauge — fell to its lowest level since January, closing at 14.25. (Source: Yahoo Finance)

Bullish trend + broadening participation + very low volatility = constructive, but increasingly complacent.

I would not become bearish simply because the VIX is at 14.25. In strong bull markets, the VIX can stay below 15 for extended periods. However, a sudden move back above 18–20 would get my attention, particularly if it occurs while IWM, HYG, and the S&P 500 begin breaking technical support. (Source: Barron’s)

The VIX is telling us the market is confident — not necessarily that it is safe. At 14.25, I would remain constructive but watch closely for a volatility breakout as an early warning signal.

The Market Rally May Feel ‘Hot,’ But the Data Still Supports It

The following analysis draws on research from Zacks Investment Research / Mitch on the Markets. Please confirm the exact article title and date before publication.

Many investors are looking at the current market rally and wondering if it is sustainable. When stocks move higher in a hurry, it is reasonable to ask whether the market has moved too far, too fast. Market volatility can move stocks sharply in both directions in the short run, but over time, earnings, economic growth, business investment, and consumer demand matter far more.

Corporate Earnings

Through August 7, 444 S&P 500 companies had reported Q2 results, representing nearly 89% of the index’s membership. Earnings were up 42.2% from the same period last year on 14.8% higher revenues. Beat rates were also strong, with 82.7% of companies exceeding earnings estimates and 76.4% topping revenue expectations. (Source: Zacks Investment Research)

Total S&P 500 earnings are expected to rise 27.1% in 2026; excluding the technology sector, earnings are still expected to increase 14.6% — a solid showing that speaks to broad economic strength. These are analyst estimates and are not a guarantee of future results. (Source: Zacks Investment Research)

Economic Growth

Headline Q2 real GDP growth slowed to 1.5% annualized from 2.1% in Q1. But private-sector components were stronger than many appreciate. Consumer spending, business investment, and residential investment grew at a 3.3% annualized pace — the strongest reading in more than three years. Capital spending rose 8.4% annualized.

Labor Market

July payrolls fell by -23,000, missing expectations for a gain. But a meaningful part of that decline appears to have come from local government employment, while private employers still added approximately 30,000 jobs. Monthly jobs data can be choppy and subject to revision.

Bottom Line

The current market advance has not been built on sentiment alone. Corporate earnings are growing, revenues are rising, business investment remains healthy, and the AI buildout is showing up in real spending, real revenue, and real earnings power. Past performance is not indicative of future results. (Source: Mitch on the Markets / Zacks)

What I’ll Be Focused On This Week

The items below reflect Richard Naso’s personal areas of focus for the coming week and are provided for informational and educational purposes only. They do not constitute investment advice or a recommendation to trade any security.

WATCH LIST — WEEK OF AUGUST 17, 2026

• Interest Rates and Oil — The 10-year Treasury finished around 4.70%; Brent crude rose nearly 6% last week to $88.52. These are the biggest potential obstacles to the next leg higher.(Source: MarketWatch)
  
• Retail Earnings — Home Depot (Tuesday), Lowe’s and Target (Wednesday), Walmart (Thursday). Given the weaker retail-sales number, these reports could tell us a lot about the health of the consumer.(Source: Kiplinger)
  
• Fed Minutes — Wednesday — July FOMC minutes due Wednesday. With the market increasingly focused on the September rate decision, the Fed’s language could create volatility.(Source: Thompson Investments)

Richie’s Take

My overall view remains constructive, but I would be more cautious in the near term. The market continues to show impressive underlying strength: the S&P 500 just completed its third consecutive weekly gain and remains near record highs, while the Russell 2000 gained 1.1% this week, significantly outperforming the S&P’s 0.4% gain.

What I find most encouraging is the broadening of participation. Small caps are outperforming, HYG remains stable, and the VIX is down near 14, indicatingvery little immediate fear. That combination tells me investors are still willing to take risk, which is generally a healthy sign for the equity market.

The caution comes from complacency. The VIX is unusually low, while SKEW has been moving higher, suggesting that although investors are not concerned about normal volatility, some are still paying for protection against a larger tail event. Add in a 10-year Treasury yield near 4.7%, higher oil prices, and some recent signs of softer consumer activity, and there are enough crosscurrents to keep me from becoming overly aggressive.

I remain bullish longer term and cautiously constructive near term. I would not fight the trend or try to predict a top, but after this extended run I would be more selective about chasing prices. If IWM and HYG continue to hold up while the VIX remainscontained, I would view any normal pullback as a potential opportunity. Conversely, if IWM and HYG begin breaking down while the VIX moves decisively higher, that would be my signal to become much more defensive.

The market is strong — but when confidence is this high, I want to see the underlying indicators continue to confirm it.

— Richie

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