08/10/2026 Trading Recap and Outlook

Good morning, traders. Let’s get started.

Another winning week.

In our core book, we took profits on most of our GOOGL calls near the local high, with the stock trading around $375, locking in gains of more than 200%. We also caught several rounds of NVDA gamma squeezes, while the gold position we had built in advance finally began to pay off.

Our second entry into GOOGL was not handled nearly as well. The directional view was not the problem; the mistake was underestimating the downside risk embedded in a high-IV setup. After buying the sharp selloff, we were hit by a meaningful IV crush and ultimately stopped out. The lesson is straightforward: getting the direction right does not guarantee that an options trade will make money. Volatility pricing at entry matters just as much.

The rest of our tactical book performed well. We took substantial profits in FTNT, exited NBIS around breakeven after it broke below 200, and closed both SOXL and SNXX for gains.

The only ugly trade this week was SPCX. Our underlying thesis was ultimately validated, and we did buy near the lows, but we failed to hold the position and got off the train too early, missing the most profitable part of the subsequent markup phase.

The thesis was right, but the trade was not. Finding the low is only the first step. Holding the position while the core thesis remains intact is just as much a part of trading.

In our Discord, I post my latest thoughts every day, while many experienced traders in the community continuously share their own insights. If you have not yet joined the subscriber chat, click the link below:

https://sidestack.io/franktrading

With that out of the way, let’s move on.

Global risk assets just had their strongest week since mid-April. But the broad rally at the index level concealed extreme dispersion underneath: memory stocks collapsed, gold surged, the KOSPI fell for a seventh consecutive week, and Bitcoin continued to play dead. Let’s go through it asset by asset.

U.S. Equities: The strongest weekly gains since April, but internal dispersion is widening

The S&P 500 gained 3.58% for the week and closed at 7,757.64, another record closing high. The Nasdaq rose 5.19% to 26,690.62, while the Dow advanced 2.96% to 54,036.93. All three indices posted their largest weekly gains since mid-April.

Friday’s catalyst was the July payroll report. U.S. nonfarm payrolls fell by 23,000 in July, far below the consensus estimate of +80,000 and the first negative monthly print of the year. More importantly, the previous two months were revised down by a combined 103,000: May was cut from 129,000 to 63,000, while June was revised from 57,000 to 20,000. The unemployment rate fell from 4.2% to 4.1%, but not because employment improved. Instead, 264,000 people left the labor force, pushing the participation rate down to 61.4%, its lowest level since February 2021. Average hourly earnings slowed to 3.2% year over year, the weakest pace in nearly five years.

This was a textbook “bad news is good news” trade. The payroll miss forced traders to scale back their rate-hike bets, sending the FedWatch-implied probability of a September hike from 55% to 44.1%. The dollar weakened, gold surged, and the Nasdaq led the rally.

Europe: Broad gains, led by the DAX

Germany’s DAX gained 2.69% for the week to close at 26,319.45. France’s CAC 40 rose 2.41% to 8,714.93, while the FTSE 100 added 0.30% to 10,901.09. The Euro Stoxx 50 closed Friday at 6,523.86, up 0.33% on the day.

Part of Europe’s strength came from the currency tailwind created by a weaker dollar, while part reflected the fact that expectations for a 25bp ECB hike to 2.5% in September had already been absorbed. One diplomatic event deserves attention: the U.S. Treasury sold euros to buy yen without notifying the ECB, an action that ECB officials described as an unprecedented breach of the long-standing norms of cooperation among Western monetary authorities. The longer-term implications for confidence in the euro are worth watching.

Japan: The Nikkei rose 1.93%, while the KOSPI fell for a seventh straight week

The Nikkei 225 gained 1.93% to close at 65,606.71, its strongest weekly performance since June 19. South Korea, however, remained a nightmare. The KOSPI fell more than 5% for the week to 6,258.77, marking its seventh consecutive weekly decline, the longest losing streak since December 2022. SK Hynix has fallen more than 35% over the past month, while Samsung Electronics is down more than 21%. A memory-sector correction, combined with a regulatory crackdown on leveraged ETFs that has escalated to the threat of criminal referrals, delivered a double blow to the Korean market.

The contrast is striking: Japan and South Korea are both semiconductor-heavy markets, yet the Nikkei rallied while the KOSPI collapsed. Japan benefited from the currency tailwind following yen intervention, corporate-governance reform, and demand for AI-server materials from companies such as Shin-Etsu Chemical and JX Advanced Metals. Korea, by contrast, suffered from its excessive exposure to memory chips and panic surrounding leveraged-ETF regulation.

Precious Metals: Gold reached a seven-week high, while silver surged 10% in a single week

Gold futures gained 7.17% for the week, while silver rose 10.41%, triggering systematic CTA short covering.

Beyond the payroll miss, the U.S. Treasury’s decision to sell euros and buy yen without notifying the ECB introduced a new element of distrust into the fiat-reserve system. For central banks already diversifying their reserves—particularly China, which has been buying gold continuously since December 2024—this signal carries far more weight than any single payroll report.

Crude Oil: A brutal weekly decline, followed by a Friday rebound

WTI closed at 77.14, down 8.8% for the week. The price action traced a complete narrative cycle: Trump called off strikes on Iran early in the week, sending oil sharply lower; positive progress in the Strait of Hormuz negotiations pushed prices down again; then, over the weekend, Iran’s parliament began reviewing legislation that would bar U.S. and Israeli vessels from the strait, while Iran threatened oil, electricity, and water infrastructure across the Gulf. Oil rebounded.

Rates: A bull steepener, led by the front end

The two-year Treasury yield closed at 4.20%, down roughly 7bp on the week, while the ten-year yield finished at 4.65%, down about 6bp. The 2s10s spread stood near 45bp. After payrolls, the ten-year briefly fell to 4.60% before rebounding to 4.65%.

BlackRock’s global fixed-income CIO, Rick Rieder, said that raising rates “doesn’t make much sense.” His argument is that the AI productivity revolution is reshaping the labor market: July’s negative payroll print is not a recession signal, but evidence that U.S. companies are learning how to expand output without increasing headcount. Roughly 25 S&P 500 companies have quantified AI’s impact on margins, with an average benefit of 180bp. Second-quarter productivity rose 1.4%, well above the 0.6% consensus estimate, while Goldman Sachs expects productivity growth to average roughly 2.3% between 2026 and 2030.

My view is that Rieder has the direction right, but takes the conclusion too far. AI is reshaping the labor market, and the Phillips curve has flattened: weakness in employment is transmitting less forcefully into inflation. But saying rate hikes are meaningless goes too far. Rates still matter for housing, credit, and small businesses. The more precise conclusion is that nonfarm payrolls are systematically losing some of their value as a real-time barometer of the economy.

FX: The dollar weakened as the aftershocks of intervention continued

DXY closed at 99.54, down roughly 0.4% for the week after touching 99.40 intraday. EUR/USD ended at $1.156, up 0.26% on the week. USD/JPY finished at ¥157.80, up 0.25% as the yen gave back a small part of its post-intervention move. Onshore USD/CNY closed at 6.7501, implying renminbi appreciation.

The most important story in FX this week was not the exchange-rate move itself, but the mechanics and diplomatic consequences of the joint U.S.-Japan intervention. The U.S. Treasury, acting through the New York Fed and using Goldman Sachs and Morgan Stanley as agents, sold euros to buy yen instead of selling dollars directly. The core motivation was to protect the dollar’s credibility and prevent Japan from selling Treasuries. The ECB learned about the transaction only after it had been completed and reportedly felt “betrayed.” The framework of trust underpinning cooperation among Western central banks is eroding. That is precisely why this episode is structurally bullish for gold over the long run.

After putting all the data on the table, my conclusion is simple: the market is asking the wrong question.

Everyone is still debating whether the economy is strong or weak, and whether the Fed should move. But that is not what will determine the next step. The current macro mix looks like strong growth, a tight labor market, and high inflation—all three seemingly pointing in a hawkish direction. But growth is concentrated in a single theme, labor is tight because there are fewer workers rather than more jobs, and inflation is high because oil is expensive rather than because there is too much money chasing demand.