Copper Hits A Record On Trump's Threat, More Investors Join TACO Trade, Fed Minutes Ahead

To gain an edge, this is what you need to know today.

Copper At Record High

Please click here for an enlarged chart of United States Copper Index Fund CPER.

Note the following:

• The chart shows that copper jumped to a new high yesterday on Trump’s threat to impose 50% tariffs on copper.
• The chart shows that zone 1, previously the resistance zone, has now become the support zone.
• RSI on the chart shows that copper is overbought but still has room to run.
• The chart shows that the volume was heavy, indicating conviction.
• There was a time when copper was in our ZYX Allocation Core Model Portfolio.  If it was not for Trump often changing his mind, copper would have been added to our ZYX Allocation Core Model Portfolio.
• As full disclosure, Freeport-McMoRan Inc (FCX), the world’s largest copper producer by mined volume is in our ZYX Buy Core Model Portfolio.  In the Portfolio that surrounds our Core Model Portfolio, there are two other copper producers First Quantum Minerals Ltd (FQVLF) and Taseko Mines Ltd (TGB).  As full disclosure, yesterday a signal was given by us to take advantage of the strength in FQVLF by taking partial profits.
• TGB provides an exceptional opportunity for investors who believe that Trump will not chicken out and actually impose large tariffs on imported copper.  The reason is the Florence Copper Project in Arizona, which is 100% owned by TGB.  As full disclosure, We gave a new signal this morning in our ZYX Buy on TGB to take partial profits.
• Copper is important, especially for EVs, the electrification of the economy, and AI data centers.  Copper is the third most consumed metal after iron and aluminum.  About one-half of the copper used in the US is imported.  Copper is also known as Dr. Copper due to the impact of copper on the economy.
• Trump is also threatening a 200% tariff on pharmaceutical imports.  So far, pharmaceutical stocks are only showing a mild reaction because the plan appears to be to give about 18 months for pharmaceutical supply chains to shift.
• FOMC minutes will be released at 2 pm ET.  We will study them closely for clues about the Fed’s policies.  The FOMC minutes may be market moving.
• In April 2025, when President Trump paused reciprocal tariffs and claimed he would have 90 trade deals in 90 days.  The stock market believed Trump and staged a strong rally that is still continuing.  The stock market kept going up when more announcements from the administration came out that they were close to several deals.  Now, 90 days have passed, and Trump has extended the deadline from July 9th to August 1st; however, there are only two deals.  One of those deals is with the UK and the other with Vietnam.  There is also a partial deal with China.
• You may be thinking that Trump produced only two deals when 90 were promised — this should cause the stock market to pull back.  However, the stock market is showing no signs of pulling back.  This is classic strong bull market behavior, where investors totally ignore the negative news and believe in the most positive interpretation of the news.  Historically in strong bull markets, the stock market gets totally divorced from reality.
• Striking deals is proving more difficult than the administration thought.  Now, Trump is sending letters to several countries threatening harsh tariffs.  The stock market is seeing buying as more investors join the TACO(Trump Always Chickens Out) trade.  Investors believe that when it is all said and done, Trump will likely give in, and the tariffs will not be as harsh.

Magnificent Seven Money Flows

In the early trade, money flows are positive in Amazon.com, Inc. (AMZN), Alphabet Inc Class C (GOOG), Meta Platforms Inc (META), Microsoft Corp (MSFT), NVIDIA Corp (NVDA), and Tesla Inc (TSLA).

In the early trade, money flows are negative in Apple Inc (AAPL).

In the early trade, money flows are positive in SPDR S&P 500 ETF Trust (SPY) and Invesco QQQ Trust Series 1 (QQQ).

Momo Crowd And Smart Money In Stocks

Investors can gain an edge by knowing money flows in SPY and QQQ.  Investors can get a bigger edge by knowing when smart money is buying stocks, gold, and oil.  The most popular ETF for gold is SPDR Gold Trust (GLD).  The most popular ETF for silver is iShares Silver Trust (SLV).  The most popular ETF for oil is United States Oil ETF (USO).

Bitcoin

Bitcoin is seeing buying.

Arora Protection Band And What To Do Now

It is important for investors to look ahead and not in the rearview mirror.  Our proprietary Protection Band puts all of the data, all of the indicators, all of the news, all of the crosscurrents, all of the models, and all of the analysis in an analytical framework that is easily actionable by investors. 

Consider continuing to hold good, very long term, existing positions. Based on individual risk preference, consider a protection band consisting of cash or Treasury bills or short-term tactical trades as well as short to medium term hedges and short term hedges. This is a good way to protect yourself and participate in the upside at the same time.

You can determine your protection bands by adding cash to hedges.  The high band of the protection is appropriate for those who are older or conservative. The low band of the protection is appropriate for those who are younger or aggressive.  If you do not hedge, the total cash level should be more than stated above but significantly less than cash plus hedges.

A protection band of 0% would be very bullish and would indicate full investment with 0% in cash.  A protection band of 100% would be very bearish and would indicate a need for aggressive protection with cash and hedges or aggressive short selling.

It is worth reminding that you cannot take advantage of new upcoming opportunities if you are not holding enough cash.  When adjusting hedge levels, consider adjusting partial stop quantities for stock positions (non ETF); consider using wider stops on remaining quantities and also allowing more room for high beta stocks.  High beta stocks are the ones that move more than the market.

Traditional 60/40 Portfolio

Probability based risk reward adjusted for inflation does not favor long duration strategic bond allocation at this time.

Those who want to stick to traditional 60% allocation to stocks and 40% to bonds may consider focusing on only high quality bonds and bonds of five year duration or less.  Those willing to bring sophistication to their investing may consider using bond ETFs as tactical positions and not strategic positions at this time.

The Arora Report is known for its accurate calls. The Arora Report correctly called the big artificial intelligence rally before anyone else, the new bull market of 2023, the bear market of 2022, new stock market highs right after the virus low in 2020, the virus drop in 2020, the DJIA rally to 30,000 when it was trading at 16,000, the start of a mega bull market in 2009, and the financial crash of 2008. Please click here to sign up for a free forever Generate Wealth Newsletter.