Market recap · 4 August 2026

US stocks

2026-08-04 Market Review

The market exhibited a strong short-squeeze dynamic, with the primary tech theme demonstrating phenomenal elasticity. However, while indices saw broad-based gains, the VIX also experienced an anomalous elevation. Tomorrow, it is crucial to monitor whether the tech sector can consolidate its gains and drive an orderly rotation of capital.

📈 1. Market Overview

Today, the market presented a strong, broad-based rally, with all three major indices recording gains of over 1.7%. Advancing issues significantly outnumbered declining ones, creating an excellent wealth effect. Trading across the entire market was active, with total turnover reaching $556 billion. Volume remains at a healthy and abundant level, and the overall market sentiment demonstrates extreme aggressiveness.

• Market Signal: 70/100 (Strong, actionable for offense)
• Signal Basis: Advancing issues accounted for 72%, broadening wealth effect; major indices average return +2.03%
• Trading Recommendation: Risk appetite is decent; focus on the continuation of main themes and position discipline.

📊 2. Index Structure

The three major indices resonated highly in tandem, with the Nasdaq Composite Index becoming the absolute leading vanguard, boasting a 2.59% gain. The S&P 500 and the Dow Jones Industrial Average followed closely behind, climbing steadily. The violent surge in heavy-weight tech stocks provided the core momentum for the broader market, presenting a healthy upward structure characterized by classic growth leadership and blue-chip follow-through, with no obvious index-level drags observed.

🚀 3. Sector Themes

The Information Technology sector pulled far ahead with a single-day gain of 4.99%, demonstrating an extremely strong capital siphon effect and thematic appeal, forming the absolute core of today's market action. Materials (+1.96%) and Industrials (+1.76%) joined the rally as pro-cyclical follow-throughs, indicating that capital is not overly crowded into a shrinking number of names, but rather rotating towards areas anticipating economic recovery. Defensive sectors such as Utilities and Health Care experienced slight declines, perfectly aligning with the capital reallocation logic when risk appetite rises sharply.

Top 5 Advancing Sectors

Top 5 Declining Sectors

💰 4. Capital & Sentiment

The wide spread between 361 advancing and 141 declining issues confirms excellent market breadth and bullish enthusiasm. However, a notable internal divergence warrants caution: against the backdrop of all three major indices rising simultaneously, the VIX Volatility Index paradoxically recorded a 3.59% increase to 16.43. This indicates that while institutional capital is enjoying the right-side melt-up, defensive hedging demands against elevated volatility are simultaneously increasing. The sentiment landscape is currently in a state of "greed coupled with vigilance."

📰 5. News Catalysts

There were no major macroeconomic or industry-specific news disruptions today. The market's extreme performance was purely driven by strong internal bullish momentum and the spontaneous synergy of capital. During this news vacuum, trend inertia and the autonomous evolution of volume-price structures will dictate the direction of tomorrow's early trading session.

🎯 6. Tomorrow's Trading Plan

• Conclusion & Strategy: Offense-oriented, with a focus on balance
• Position Range: 70% - 80%
• Areas of Focus: Continue to anchor on the trend continuity of the core Information Technology theme, while keeping an eye on buying opportunities on dips in pro-cyclical areas such as Industrials and Materials during sector rotations.
• Areas to Avoid: Temporarily avoid defensive sectors (e.g., Utilities) that are suffering from capital outflows, as well as weak individual stocks that have broken their technical trends.
• Invalidation Triggers: If the Nasdaq index opens high but closes low tomorrow, retracing more than half of today's gains, and the VIX accelerates past 18, the offensive plan is immediately invalidated, and a pivot to a defensive posture is required.

⚠️ 7. Risk Warning

China A-shares

2026-08-04 Market Review

The market exhibited a strong pattern of "strong Shenzhen, weak Shanghai" and "focusing on small-caps, abandoning large-caps." The main theme of tech growth comprehensively exploded under abundant liquidity. In the short term, it is recommended to ride the trend and embrace the broad tech sector, but beware of the drag on the Shanghai Composite Index caused by the continuous bleeding of large financials.

I. Market Overview 📊

Market sentiment was extremely euphoric today, presenting a significantly warm and strong pattern. The trading volume of the two markets remained above the active baseline of 2.2 trillion, and although this volume scale is not an extreme historical high, it is sufficient to support a broad rally of over 3600 stocks and the profit-making effect of hundreds of stocks hitting their daily limits. Despite the sharp decline in large financials causing the main board index to underperform, the offensive main theme centered on tech growth has been clearly established.

• Market Signal: 77/100 (Strong, actionable for offense)
• Signal Basis: Advancing stocks accounted for 68%, profit-making effect diffusing; average gain/loss of major indices +2.38%; limit up/down difference +141
• Operational Advice: Risk appetite remains decent; focus on the continuation of the main theme and maintain position discipline.

• Volume Baseline (past 120 trading days): Median 25962 hundred million, Quartile 23105–30860 hundred million, Range high 37580 hundred million; Today's 22280 hundred million is at the 23% percentile (-14.2% vs. median).
• Volume Comparison: +10.8% compared to the previous trading day (2026-08-03 20106 hundred million); -1.2% compared to the 5-day average (22548 hundred million).

II. Index Structure 📈

The index end presented an extremely divergent "scissors" trend. The ChiNext Index and STAR 50 led the way with massive gains of over 5% and 4% respectively, and the SZSE Component Index also surged in tandem, completely establishing the absolute dominance of small and mid-cap growth stocks. In contrast, the SSE 50, representing large-cap weights, closed lower against the market trend, dragging the SSE Composite Index to just barely close positive. This structural characteristic indicates that main funds are resolutely flowing out of traditional defensive heavyweights, completing a high-low switch towards the highly elastic tech sector. Key resistance levels are being broken one by one under the leadership of tech stocks.

III. Main Sector Themes 🎯

The broad tech industry chain was the undisputed absolute main theme today. Electronic components, electronic chemicals, and semiconductor sectors collectively set off a wave of limit-ups, with overall sector gains exceeding 6%. This demonstrates extremely strong consensus among funds and industrial depth, possessing a very high likelihood of trend continuation. Meanwhile, the leading decliners were mainly concentrated in banks, insurance, and auto manufacturing. These not only served as "ATMs" for active funds rebalancing their portfolios, but also confirmed that in the current heavily traded environment, the market's risk aversion sentiment has cooled significantly.

Top 5 Advancing Sectors

Top 5 Declining Sectors

IV. Funds and Sentiment 🔥

Market risk appetite is at an absolute high. The 2.2 trillion turnover provided ample ammunition for the deep diffusion of the market rally. The extremely strong data of 141 limit-ups and 0 limit-downs throughout the day not only declared a full explosion of short-term sentiment but also showed a very strong willingness for high-level relays, with an extremely high market tolerance for error. Active funds have completely abandoned defensive strategies and are fully gaming around highly elastic leading thematic stocks.

V. News Catalysts 📰

During today's information vacuum lacking major breaking news catalysts, the extreme divergence on the board stemmed more from the funds' spontaneous choice of the "path of least resistance." The comprehensive explosion of the tech sector is essentially the result of the resonance between abundant liquidity and fund memory, reflecting the market's front-running and optimistic gaming on the subsequent potential rollout of industrial policies and the inflection point of tech fundamentals.

VI. Tomorrow's Trading Plan 📋

• Strategic Tone: Offense. The market is in a resonance period of a volume-backed rally and strengthening of the main theme.
• Position Range: 7-8 tenths (70-80%) (Actively participate in the main theme trend).
• Focus Areas: Tightly grasp the core, highly recognizable leaders of the broad tech main theme such as semiconductors and electronic components, and look for opportunities of lagging gains as funds diffuse into tech sub-sectors like consumer electronics and computing power.
• Avoidance Areas: Resolutely avoid large financial heavyweights breaking support downward such as banks and insurance, as well as marginal traditional industries that have recently lacked capital attention.
• Invalidation Conditions: If the turnover of the two markets shrinks sharply tomorrow (e.g., dropping below 1.5 trillion) leading to a rupture in liquidity support, or if the tech main theme encounters sudden bad news causing widespread limit-down divergences, it is necessary to immediately reduce positions and switch to defense.

VII. Risk Warnings ⚠️

1. Index Divergence Risk: If the severe divergence between the SSE 50 and the ChiNext Index cannot be repaired for a long time, the continuous bleeding of heavyweight stocks may eventually backfire and drag down overall market sentiment.

2. Short-Term Overheating Risk: The day after hundreds of stocks hit limit-up often faces concentrated realization of profit-taking. It is necessary to be highly vigilant against high-low switches within the tech sector and severe intraday volatility, and strictly avoid blindly chasing high lagging follower stocks that are accelerating on unified shrinking volume.

Hong Kong stocks

2026-08-04 Market Review 📊

Hong Kong stocks showed a significant "strong tech, weak main board" structural divergence today. The explosive rally in the main technology growth theme offset the pullback in the major financial sector, and a massive inflow of Southbound capital exceeding tens of billions became the core support for the market. Tomorrow, focus on the sustainability of the technology sector and the net buying trend of Southbound capital.

I. Market Overview 🧭

Today, the overall Hong Kong stock market was in a state of volatile divergence. Weighed down by heavyweights such as the financial sector, the broader market indices closed slightly lower, but trading in the growth and technology sectors was active. Due to the current lack of absolute data on the number of advancing/declining stocks and total market turnover, it is temporarily impossible to accurately evaluate the overall market breadth and volume percentile. However, judging from the extreme divergence across sectors, the internal capital game is fierce, and the characteristics of a structural market are prominent.

II. Index Structure 📈

At the index level, there was a clear diverging trend: the Hang Seng TECH Index (↑0.96%) bucked the trend and rose, becoming the absolute main force sustaining market sentiment today; while the Hang Seng Index (↓0.32%) and the HSCEI (↓0.71%) were under pressure due to the weakness of traditional heavyweight stocks. Tech stocks led the structural bullish momentum, while traditional core assets dragged down the overall center of gravity of the market to a certain extent. The indices are currently in a volatile range with pressure from above and support from technology stocks and Southbound capital from below.

III. Sector Themes 🎯

• Bullish Theme (Growth/Tech): The electronic technology sector led the market with a strong gain of 6.03%, combined with the strength in health tech (+2.79%), indicating that capital currently has an extremely high preference for high-elasticity, growth-oriented technology names, forming the core short-term bullish theme.
• Bearish Pressure (Value/Pro-cyclical): The financial sector (-1.68%) and consumer durables (-1.46%) led the declines. The weakness of financials, acting as the ballast stone of the indices, was the direct cause dragging the HSI and HSCEI into the red, reflecting that capital may be executing a high-low rotation strategy of "abandoning defensive value to chase technology growth."

Top 5 Advancing Sectors

Top 5 Declining Sectors

IV. Capital and Sentiment 💰

The most striking data point today is that Southbound capital recorded a massive net buy of 2.45 billion yuan. Against the backdrop of the HSI closing lower overall, the large-scale contrarian inflow of Southbound capital not only demonstrates mainland capital's strong willingness to support Hong Kong stock assets at their current levels, but also indirectly confirms the high risk appetite of funds, particularly the high enthusiasm for snapping up technology assets unique to Hong Kong stocks. Due to the lack of advance/decline statistics, current sentiment is primarily anchored on the strength of Southbound capital inflows.

• Southbound Capital: Stock Connect recorded a total net buy of +2.45 billion yuan today

V. News Catalysts 📰

There were no obvious news catalysts disturbing the market today. Against the backdrop of a macro and industry information vacuum, today's extreme divergence and the surge in tech stocks were purely driven by liquidity (massive influx of Southbound capital) and micro-market structural rotation.

VI. Tomorrow's Trading Plan 📋

• Trading Strategy: Balanced with a bullish tilt. The market is supported from below by massive Southbound capital, but faces structural risks from index divergence above. It is advisable to focus less on the indices and more on individual stocks.
• Position Management: It is recommended to maintain a medium-to-high position (50%-70%), keeping a certain cash exposure to cope with volatility.
• Focus Areas: Grasp the core themes closely, follow the trend and buy on dips in high-elasticity sectors like "Electronic Technology" and "Health Technology," and track the flow of Southbound capital.
• Areas to Avoid: Avoid traditional defensive or pro-cyclical sectors experiencing capital outflows, such as "Major Financials" and "Consumer Durables."
• Invalidation Conditions: If there is a sudden large-scale net outflow of Southbound capital tomorrow, or if the leading sectors of the Hang Seng TECH Index experience heavy volume breakdowns, the current offensive logic will be invalidated, requiring an immediate shift to defense and position reduction.

VII. Risk Warning ⚠️

Current market judgments are based on sector price changes and Southbound capital data. Due to the lack of whole-market turnover and advance/decline breadth data, liquidity risks of some small and mid-cap stocks or the risk of a broad sell-off in individual stocks may be masked; a pure capital-driven market without news catalysts is often accompanied by high volatility, and one must be wary of drawdowns caused by a rapid withdrawal of funds.