First Friday of August Has Teeth — I’m Selling the Rallies Until Proven Wrong

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Founder's Note:

Stocks and bonds traded lower on Thursday as oil prices moved higher. The U.S. dollar also strengthened, while precious metals were little changed.

SPX traded within a 58 bp range and closed at 7,710, above our Risk Pivot level of 7,680. VIX closed at 15 and VVIX at 88, suggesting traders remain lightly hedged against a near-term volatility spike.

The approximately 9k-lot market maker short put position at the 7,700 strike continued to provide support throughout the session.

S&P 500 HIRO finished the day at +5B delta notional, driven by approximately +7B of put selling (dark blue line) and -2B of call selling (orange line). Most of these flows were concentrated in 0DTE options.

S&P equities HIRO flow was relatively flat on the day, with muted activity in either direction.

Nasdaq

HIRO registered -2.5B delta notional, dominated by 0DTE call selling (green line). The options selling across both the S&P 500 and Nasdaq further compressed implied volatility, helping stabilize the market during the intraday session.

SPX implied volatility in the Fixed Strike Matrix declined by roughly 0.5 to 2 volatility points across strikes as a result of the day's option selling. At-the-money implied volatility for August is now around 10%–12%, indicating that the options market is pricing a relatively subdued summer volatility environment.

In single stocks, Amazon remained under selling pressure over the past three sessions after Jeff Bezos filed on August 3 to sell 15 million AMZN shares, representing approximately $4 billion in market value.

We also observed consistent negative HIRO flow in AMZN over the past two sessions. The stock rejected Call Wall resistance at 280 and traded near the 270 Key Gamma Strike today. On the downside, the next key level to monitor is the 250 Key Delta Strike.

FlowPatrol winner of the day: NextNav (NN) calls.

In the July 31 FlowPatrol report, we highlighted 20k September 18 calls and 20k September 30 calls that were bought to open. Since then, NN has rallied from approximately 13 to 16 (+23%) over the following four sessions, while the September 18 calls have appreciated from roughly $0.80 to $1.60, a gain of approximately 100%.

Last but not least, today marks SpaceX's lockup expiration, allowing employees and early investors to begin selling shares. Despite that event, we observed bullish intraday options activity, with HIRO finishing at +315M delta notional. SPCX rose 6% on the day and closed at 115.

Meanwhile, SpaceX implied volatility continued to contract following yesterday's decline, suggesting that recent premium-selling activity has continued to perform well.

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Detailed Goldman Sachs estimates for Friday’s July jobs report:

• Goldman Sachs: +75,000 nonfarm payrolls, below the +80,000 to +83,000 consensus. Goldman kept its forecast unchanged despite ADP reporting only 44,000 private-sector jobs. Investing.com

• JPMorgan: I still cannot verify a publicly released firm-specific number. JPMorgan says the labor market is moderating, not collapsing, with low layoffs offsetting slower hiring.

• Unemployment consensus: 4.2%

• Average hourly earnings: +0.3% month over month and +3.5% year over year

• FactSet consensus: +97,500, with estimates ranging from +65,000 to +130,000. FactSet

• Dow Jones/WSJ consensus: +83,000

The key number is 75,000: Goldman is below consensus and warns that July payroll reports have frequently missed estimates and suffered large downward revisions.



ES Levels

The bull/bear line for the ES is at 7739.75. ES is currently trading around 7750.00, keeping the overnight market modestly bullish while price remains above this key level. Holding 7739.75 favors buying dips, while a sustained move back below it would shift the intraday bias bearish.

Immediate resistance is at 7756.75, followed by 7770.75. A clean move through 7770.75 opens the door toward 7803.25, which is today’s upper range target. Above 7803.25, the next major resistance is 7863.00.

On the downside, initial support sits at 7746.00 and then the 7739.75 bull/bear line. Below there, 7734.75 and 7724.25 are important support levels. Losing 7724.25 would increase downside pressure and put 7676.50, today’s lower range target, into play. Further weakness below 7676.50 could extend toward 7616.75.

Overall, the ES maintains a bullish intraday bias above 7739.75. Bulls need to clear 7756.75 and 7770.75 to generate momentum toward 7803.25. Bears need a sustained break below 7739.75, with 7724.25 acting as the next important confirmation level.

NQ Levels

The bull/bear line for NQ is at 29478.50. This is the key level for today’s directional bias. NQ is currently trading around 29632.75, keeping the market above the bull/bear line and maintaining a bullish intraday posture as long as 29478.50 continues to hold.

Immediate resistance is at 29686.25, the prior high. A sustained move above 29686.25 would open the door toward 29948.25, today’s upper range target. If buyers can push through 29948.25, the next major upside resistance is 30390.50.

On the downside, initial support comes in near 29569.50, followed by the bull/bear line at 29478.50. Losing 29478.50 would weaken the bullish structure and put 29241.25 in play. Below there, the lower range target is 29008.50. A decisive failure through 29008.50 could extend downside pressure toward 28566.50.

Overall, the intraday bias remains bullish above 29478.50. Bulls need a break above 29686.25 to regain momentum toward 29948.25, while bears need to push NQ back below 29478.50 before the setup materially deteriorates.

Polaris Trading Group Summary - For Thursday, August 6, 2026

Thursday’s PTG session was a strong blend of education, market structure, and execution discipline. David spent much of the morning reinforcing how traders should read levels, define risk, manage profits, and stay aligned with the market rather than trying to force a reversal. As the day developed, the downside roadmap from the Daily Trade Strategy came into play, with the 7735 target ultimately fulfilled.

Morning Education and Trade Structure

• David defined the opening range as the 5-minute high and low.

• The room focused on reading:

  • Reclaims and failed reclaims.

  • Prior highs and lows.

  • Retests of broken levels.

  • The location of the last meaningful buyer or seller.

• Stop-loss placement was discussed in the context of market structure, rather than simply using an arbitrary number of points.

• Members responded very positively to the teaching session, with several commenting that they were taking extensive notes and gaining more clarity.

Trade Management Lessons

• A major theme was taking profits along the way.

• One member noted that scaling out has helped reduce emotional swings during trades.

• David continued reinforcing the importance of:

  • Managing risk first.

  • Letting structure determine the trade.

  • Avoiding unnecessary emotional attachment to a position.

• The discussion also highlighted the mindset of accepting that any individual trade can lose, which helps keep risk management objective.

Early Trade Opportunities

• David noted that the D-Level long had played out successfully during the session.

• Traders were reminded to watch how price behaved around important reference levels rather than assuming continuation.

• A useful observation from the room was that when price:

  • Makes an initial pullback.

  • Pushes slightly above a prior high.

  • Then quickly fails.

  That failure can sometimes create a quality trade opportunity.

Bearish Shift and Short Alignment

• By late morning, the market began showing increasing weakness.

• David highlighted that the lower targets from the DTS briefing were coming into play.

• The 7735 downside target was fulfilled.

• With price trading below the Prior Low at 7745.75, David emphasized remaining:

  • Short aligned.

  • Patient.

  • Focused on the actual market direction.

• His message was clear: do not fight the prevailing move simply because price has already traveled a long distance.

Key Levels

• 7745.75 — Prior Low

  • Remaining below this level supported the bearish posture.

  • A bullish reclaim would have opened the door to looking for longs.

• 7735 — DTS Target

  • The target was reached.

  • Once fulfilled, David identified 7735 as the new Dynamic Line in the Sand.

  • This gave traders a fresh reference level for evaluating subsequent price action.

Market Context

• David described the market as weak during the midday decline.

• He noted that unfavorable negotiation headlines were contributing to the tone.

• He warned that the market could sell off as quickly as it had previously rallied.

• The broader lesson was to follow price behavior rather than trying to predict where a reversal “should” happen.

Late-Day Development

• Near the close, David reported an MOC flip to a buy imbalance.

• This represented a late-session change in order-flow conditions and another reminder that market alignment can shift throughout the day.

Key Lessons From the Day

• Stay aligned with the prevailing market structure.

• Do not fight momentum without evidence of a reclaim or structural reversal.

• Use important levels as decision points, not predictions.

• A fulfilled target can become a new support/resistance reference.

• Scale profits when appropriate to reduce emotional pressure.

• Place stops based on structure and invalidation.

• Failed breakouts and failed reclaims can offer valuable trading information.

• Keep the process simple and repeatable.

DTG Room Preview – Friday, August 7, 2026

Macro Focus

• July Jobs Report at 8:30am ET is the main event and the first major test of Chair Warsh’s less-guidance Fed stance.

• A strong or weak print could quickly shift expectations around the next Fed move.

• Fed Musalem added to hawkish risk by saying the Fed should have hiked at the last meeting.

• Expect the biggest reaction in Treasury yields, the dollar, and equity index futures.

• Richmond Fed President Barkin speaks at 10:00am ET.

• Consumer Credit is due at 3:00pm ET.

Oil & Geopolitical Risk

• Crude continues to push higher, moving back toward $80/barrel.

• Tensions around Iran and the Strait of Hormuz remain a key volatility driver.

• Further escalation could raise inflation expectations and pressure rate-sensitive sectors.

• Iran, Ukraine, Israel, the West Bank, and Trump social-media headlines remain potential volatility catalysts.

Trade & China

• The Trump administration announced new measures targeting competition with China in solar, semiconductors, tungsten, and battery materials.

• Watch materials, solar, and chip-equipment names with meaningful China exposure.

• Any retaliatory response from Beijing could quickly move futures.

Tech & AI

• AMD is acquiring Toronto AI-chip startup Taalas as competition with Nvidia continues to intensify.

• Alphabet’s $25B debt sale highlights the scale of hyperscaler spending on AI infrastructure.

• AI capex remains supportive for long-term growth but continues to pressure near-term margins.

• Sentiment remains fragile across software and AI-adjacent names following IBM’s recent sharp selloff.

• Meta faces additional regulatory pressure after a $567M New Mexico judgment.

ES / Futures Setup

• ES volatility declined for a second straight session, but overall ranges remain elevated.

• The 5-day average daily range fell to 102.25 points, down from 126.25 on Wednesday.

• Whale bias is bullish heading into the 8:30am jobs report, although overnight large-trader volume is lighter than recent sessions.

• Wednesday’s all-time high remains the key upside reference.

• A bullish jobs reaction could put new highs in play.

• If ES fails to push higher after the report, 7822/27 becomes an important resistance zone.

• The 50-day MA at 7547 remains loose downside support.

Key ES Levels

• Resistance: 7822/27

• Support: 7620/15

• Support: 7447/52

• Support: 7313/08

• Support: 7130/35

• 50-day MA: 7547

Earnings

• Premarket: ECHO, KEP, PPL, VST

• After the close: TTWO

• Monday morning: Barrick Mining (B)

Bottom Line

• Today’s session is likely to be driven by three themes: Fed uncertainty, geopolitical risk, and AI-sector spending.

• Expect headline-driven moves around rates, oil, and mega-cap tech.

• Directional conviction may remain limited until the jobs data is released.