Can Friday’s Rally Continue Into August?

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

Source: Barron’s Market Dashboard, print edition, August 3, 2026.

Russell 2000: Flat Week, Telling Friday

The Russell 2000 had a relatively flat week, but the headline number masks some important action underneath. On Friday, the index fell 0.5% to 2,931.34 — small caps failed to participate in the broad market rally. While the Nasdaq gained 1% and the S&P 500 gained 0.7%, the Russell 2000 declined 0.5%.

HYG: A Yellow Flag From Credit

The iShares iBoxx High Yield Corporate Bond ETF (HYG) was a little concerning this week. The ETF finished around $79.40, near the lower end of its 52-week range of $78.63–$81.18. As of July 28, its NAV was $79.26 and its closing price was $79.42.

The bigger issue isn’t the weekly percentage move — it’s what HYG is telling us about risk appetite. HYG has been weakening while equities remain relatively strong. The $78.60–$79.00 zone is the important area to watch.

Why it matters for stocks:

● When HYG is strong, it suggests investors are comfortable taking risk and credit markets remain supportive of equities.

● When HYG weakens, it often signals growing concern about:
○ economic growth,
○ rising default risk,
○ tighter financial conditions,
○ or declining liquidity.

Financials as a Confirmation Indicator

The financial sector was constructive this week, and I think it is worth watching closely as a market confirmation indicator. The cleanest broad measure is XLF, which tracks the S&P 500 financial sector — banks, insurance companies, capital markets, and consumer finance.

Key takeaways:

• XLF remains in an uptrend and finished the week near $57.
• Financials have been showing relative strength, with major banks and financial companies holding up well.
• JPMorgan, Bank of America, Visa, and Mastercard have been among the stronger financial names recently.
• The sector is benefiting from expectations of continued economic growth and a relatively favorable credit environment.

The concern is Treasury yields. A continued rise in long-term yields could eventually pressure financial valuations, even though a steeper yield curve can benefit banks’ net interest margins.

Apple: Blowout Quarter, Supply Warning

As reported by BBC News, Apple spooked Wall Street on Thursday by warning of a “significant” hit ahead from supply constraints on its most popular products — sending the shares down more than 7% after hours despite a strong quarter: revenue up 16% to $109 billion on unexpectedly high iPhone sales, and profits up 26% to $29 billion.

Per the report, outgoing CEO Tim Cook said the constraints — already visible in Mac availability — are expected to worsen and spread to iPhone and iPad, with advanced-node chips (largely manufactured by Taiwan-based TSMC) a key bottleneck. Cook framed it as a demand-forecast problem rather than a routine supply issue, with iPhone and Mac sales up 22% and 25% respectively in the June quarter. The company also disclosed that tariff refunds added roughly two percentage points to gross margin — about $1.1 billion by the BBC’s math — which Cook said Apple intends to reinvest in the US alongside its previously announced $600 billion domestic manufacturing commitment. Cook also pointed to the coming public relaunch of an AI-powered Siri, currently in beta, as “an enormous opportunity” and highlighted on-device AI as a strategic advantage.

Amazon: AWS Booming, Spending Rising

The same coverage noted that Amazon shares jumped 10% after hours despite negative free cash flow of $7.6 billion from heavy AI spending. AWS grew 37% — its best showing in four years — while total sales rose 20% to $200 billion and profits more than doubled to $63 billion. Forrester analyst Tracy Woo called the results a clear sign that Amazon’s infrastructure investments are meeting real demand rather than outpacing it, though she flagged the company’s plan to spend $220 billion on AI this year — up from $200 billion just three months ago — as a longer-term question mark as capacity commitments come online in 2027 and 2028.

Semiconductors: Analyst Sees Further Downside Risk

This week’s sector read comes from Michael Kramer of Mott Capital Management, writing on Seeking Alpha (July 28). His thesis: after a historic run higher, the semiconductor sector has been hit hard — and options positioning and technical trends suggest it could fall further.

Kramer’s key levels center on the VanEck Semiconductor ETF (SMH). He identifies $510–$520 as critical support that needs to hold, with the largest concentration of put gamma at $520 marking the most likely spot for a bounce — and $500 the next gamma support if that fails. On the upside, he sees resistance at the zero-gamma level around $560, with further hurdles extending back toward $600.

The positioning story behind those levels: the ETF has entered a negative gamma regime, where market-maker hedging amplifies moves in both directions. Implied volatility remains elevated even as realized volatility eases — a divergence Kramer reads as demand shifting from upside calls to downside protection. His data shows the change starkly: on June 18, eight of SMH’s ten largest holdings had implied volatility above the 90th percentile of their one-year range with skew tilted toward calls; by July 28, only five remained that elevated and skew had shifted toward neutral or puts. Technically, the ETF has traded in a declining channel since its June 22 peak, with a falling RSI and the 10-day EMA acting as repeated resistance.

The article was published ahead of last week’s hyperscaler earnings, which Kramer flagged as the potential catalyst either way: stronger capital-spending guidance could stabilize sentiment, while disappointing outlooks would reinforce concerns about a slowdown in AI investment — especially with Nvidia not reporting until late August.

As always, this is a summary of third-party analysis, not a recommendation. The price levels and forecasts are the analyst’s own views and are not a guarantee of future performance.

Key Events and Data Points to Monitor

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 3, 2026

▸Earnings Season Rolls On

Names due to report include PLTR, AMD, CAT, MCD, MRK, SPCX, CVS, LLY, and UBER

▸Wednesday: PMI

A read on business activity as the market weighs growth against rate expectations

▸Friday: Jobs Report

The week’s key macro data point for the Fed’s rate path

▸HYG — The $78.60–$79.00 Zone

Credit has been weakening while equities stay firm; a break of this area would be a meaningful warning

Richie’s Take

While I believe we could see increased volatility and some near-term consolidation, I continue to believe the underlying market environment remains constructive. The recent action in the Russell 2000, HYG, financials, and semiconductors suggests we may need to be patient as the market works through some short-term uncertainty and rotation.

That said, I view any meaningful weakness as an opportunity rather than a reason to abandon the longer-term outlook. My approach remains cautious in the near term, but firmly focused on the bigger picture. I continue to believe this is a buy-and-hold market, and my own approach is to use periods of volatility and weakness to focus on quality companies with strong long-term growth prospects.

— Richie

This content (“Content”) is produced by Richard Naso. The Content represents only the views and opinions of Mr. Naso, who is compensated by TradeZero for producing it. Mr. Naso’s trading experiences and accomplishments are unique, and your trading results may vary substantially from his. TradeZero does not endorse the Content and makes no representations or warranties with respect to the accuracy of the Content or information available through any referenced or linked third-party sites. The Content has been made available for informational and educational purposes only and should not be considered trading or investment advice or a recommendation as to any security.

Past performance referenced in this Content is not indicative of future results.

Trading securities can involve high risk and the potential loss of funds. Trading on margin is for experienced investors and traders only, as the amount you may lose can be greater than your initial investment. Short selling as a securities trading strategy is extremely risky and can lead to potentially unlimited losses. Options trading is not suitable for all investors as it can involve risk that may expose investors to significant losses. Please read the Characteristics and Risks of Standardized Options (the Options Disclosure Document, or ODD) at theocc.com/Company-Information/Documents-and-Archives/Options-Disclosure-Document before deciding to engage in options trading.

TradeZero provides self-directed brokerage accounts to customers through its operating affiliates: TradeZero America, Inc., a United States broker-dealer, registered with the SEC and member of FINRA and SIPC; TradeZero, Inc., a Bahamian broker-dealer registered with the Securities Commission of the Bahamas; TradeZero Canada Securities ULC, a Canadian broker-dealer, member of CIRO and CIPF; and TradeZero Europe B.V., a Dutch broker-dealer authorized and regulated by the AFM under MiFID II (collectively, the “TradeZero Broker Dealers”).