This Week in Markets - August 2: Follow Through Day Incoming?
Stocks closed July green, but 30 year yields just hit a 19-year high and Friday's jobs report has to thread a very narrow needle.
Welcome back to another weekly market prep with The Dividend Journal! If this is your first time here, great timing. This newsletter is your one stop shop to stay ahead of the market and step into the week fully prepared.
July ended as a split decision. The Dow logged a fourth consecutive winning month while the Nasdaq dropped 3.2%, and the gap between them was decided almost entirely by how each company answered one question: are you spending on AI with discipline? Underneath the tape, something more important happened. Kevin Warsh ran his first FOMC meeting as Fed chair, delivered a hold with three dissents wanting to hike, and stripped the statement of forward guidance. The bond market did not like the ambiguity.
That leaves us with a genuine tension going into August. The long end of the curve is pricing higher inflation risk from a 20% monthly move in crude, while the labor market added just 57,000 jobs in June. This week ends with the July payrolls print that arbitrates between those two stories.
Let’s get into it.
⚡ Last Week Overview
The indexes finished higher, but July itself was a coin flip. The S&P 500 closed Friday at 7,489.72, up 0.7% on the day and roughly 1% on the week. The Nasdaq Composite finished at 25,373.85, up 1% Friday and about 1.6% for the week. The Dow closed at 52,485.03, up 276.97 points. For the month, the S&P slipped 0.1% and the Nasdaq fell 3.2%, while the Dow edged up 0.3% for its fourth straight monthly gain (AP). The Russell 2000 closed at 2,931.34, down 0.5% Friday, so small caps lagged the rally (Yahoo Finance).
Big Tech earnings split on capex discipline, not on growth. Amazon jumped 15.3% Friday on cloud strength. Apple fell 7% as Services and China revenue came up short. Microsoft surged after fiscal Q4 revenue of $90 billion, up 18%, with Azure growth accelerating to 43% and crossing $100 billion in annual revenue for the first time (24/7 Wall St). The four hyperscalers now guide to a combined $720 billion to $745 billion of 2026 capital spending. The names that have actually shown material gains from capex spend were rewarded.
Warsh’s first meeting produced a hold and an open argument. The Fed left the funds rate at 3.50% to 3.75%, with three officials dissenting in favor of a hike on inflation concerns (CNBC). The statement was notably shorter than recent norms, consistent with Warsh’s stated preference for less forward guidance (Yahoo Finance). Stocks did not take it well: the Dow fell about 1,100 points Wednesday, its worst session in over a year. The next decision is September 16.
🃏 The Wild Card: Follow Through Day (FTD) for next leg up in markets?
We’re going to get a little technical here:
April of this year saw very similar price action where the market printed a large bullish engulfing to mark the bottom.
It took a few days to digest but then that ultimately marked the start of the next leg up.
The same type of price action occurred last year in April 2025 too:
It took a few more days to digest after the TACO, but from there it sparked the leg up.
And here we are currently:
Very similar large engulfing candle the upside that mitigates the large sell candle. The only concern here is that there is a lack of individual names that are setting up to support this potential next leg up.
So for things to be more clear, we would need to see some very strong weekly candles develop. We’ll talk more about this later.
🗓️ The Week, Day by Day
Monday, August 3: ISM Manufacturing PMI for July at 10:00 AM ET
PLT 0.00%↑ reports after the close with consensus near $1.81 billion in revenue, up roughly 81% year over year (TradingKey). At that growth rate, the number matters less than the guidance.
Tuesday, August 4: JOLTS job openings for June at 10:00 AM ET (Investrade) JOLTS is the quietest labor read of the week and often the most honest one.
A heavy earnings slate: CAT 0.00%↑ , MRK 0.00%↑ , MCD 0.00%↑ , and PFE 0.00%↑ before the open, with AMD 0.00%↑ and AMGN 0.00%↑ after the close (CNBC).
Caterpillar is your industrial and construction demand read, McDonald’s is your low end consumer read, and AMD is the cleanest test of whether AI infrastructure spending is broadening past Nvidia.
Wednesday, August 5: ADP private payrolls for July at 8:15 AM ET and ISM Services at 10:00.
LLY 0.00%↑ and DIS 0.00%↑ report before the open.
Thursday, August 6: Weekly jobless claims at 8:30 AM ET, plus Q2 nonfarm productivity and unit labor costs.
Friday, August 7: July nonfarm payrolls at 8:30 AM ET, with the unemployment rate and average hourly earnings. Consensus is roughly 83,000 jobs and 4.3% unemployment.
Next week loads up the other half of the argument: July CPI lands Wednesday, August 12, and it is the first inflation print that fully captures the 20% move in crude.
📈 Market Update
SPY 0.00%↑: Overall the Dow + SPY 0.00%↑ still remain strong vs tech.
With a weekly hammer on high volume off the weekly 9/21, this looks very strong for possible continuation to new highs. Remember, the longer the consolidation is the larger the breakout will be!
Biggest factor is to see price continue to tighten or volume increase as momentum starts to rise as price goes up.
Bitcoin: Crypto continues to chop near 60k-65k and continues to affirm our thesis that this is a great accumulation phase.
We expect this to continue until at least this mid-term year is over for a nice pop in 2027.
🔍 What I’m Watching
HPE 0.00%↑: Fantastic weekly with price curling to the upside on this tightened range.
A break and hold over 50.87 is key for the next leg up. Great first target is that earnings wick at 64.25. I believe this setup can be added into as we break to the upside and the real move will likely be high velocity.
GM 0.00%↑: First weekly close above 87.62 pivot high in 168 days. The daily shows price has started to slow down and digest the earnings move and a retest of the pivot high can be a great add spot.
With how SPY 0.00%↑ is still stronger than tech, I think GM 0.00%↑ can be a huge benefactor if the trend continues.
HON 0.00%↑: A slow mover but I don’t think we can ignore the nice weekly setup where price is starting to bar code. A break and hold over 250-251 will be key for confirmation of this breakout ESPECIALLY since we’ve rejected this zone so many times.
💡 My Take
I am not positioning ahead of Friday, and I would push back on anyone who tells you they know which way this one breaks. It’s a bit too early to be calling the bottom but it would also be foolish to say this is a bull trap. It’s not the same exact setup as April of 2025 and 2026, but there are similar patterns. Continued data and updates on global tensions will be the main drivers for deciding what happens next.
On top of this, I am respecting the trend while acknowledging its narrowness. The Dow just posted a fourth straight winning month and the S&P is up over 8% on the year, so the primary trend is intact and I am not fighting it. But the Russell 2000 lagged on Friday, the Nasdaq lost 3.2% in July, and the 30 year is at a 19 year high. Breadth that thin plus duration that stressed is a market where being right on direction and wrong on timing still costs you. For options specifically, note that implied volatility into a binary event like payrolls is expensive for a reason, and buying premium the day before a known catalyst is usually paying retail for a coin flip.
The process point is the whole point: your job this week is not to predict the payrolls number, it is to know in advance what you will do at each of the three or four outcomes, and to have that written down before 8:30 AM ET Friday. The edge in a week like this is almost entirely in the preparation, not in the forecast.
Work with me 1-on-1: I keep a few private spots for traders who want direct help with their process. Details here.
See you next week. Trade well.
Will