Yesterday’s market action took whipsawing to the next level. As widely anticipated, the Federal Reserve maintained interest rates, reflecting steady macroeconomic data and a resilient labor market. Yet, despite this predictable move, equity markets initially sold off—likely due to the confirmation of 50% tariffs on semi-finished copper imports, effective August 1. While the tariff policy itself wasn’t new, the execution underscored a shift in President Trump’s approach, signaling a definitive move away from TACO-style diplomacy toward enforceable protectionist measures.
The copper market experienced one of its most violent reversals in decades. After rallying nearly 18% in anticipation of broad tariffs, copper futures collapsed over 20% when the actual measures excluded refined copper, catching markets off guard. Traders who had stockpiled refined copper for arbitrage were left with excess inventory. As the trade unwound, the COMEX premium evaporated, and prices plummeted from $5.69 to $4.45 per pound in a single session.
Once this bearish shock was absorbed, sentiment began to shift, being an almost perfect entry point for insiders. A strong earnings outlook from mega-cap tech, including Microsoft and Meta (whose results were released post-market), helped stabilize markets and lifted futures during the final stretch. This late-session rebound reflected a recalibration of expectations—driven by both waning rate uncertainty and renewed optimism around tech sector resilience.
How to Navigate This Market? In environments like this, depression and euphoria exist side by side—hallmarks of a late-stage speculative bubble. The market’s current phase is marked by rapid selloffs followed by sharp recoveries, a process that exhausts directional exposure and destabilizes sentiment. Eventually, once both bulls and bears are worn out, a true breakdown (or breakout) may occur.
That said, a bullish scenario remains plausible. If prices continue to correct over time and test key moving averages, such as the daily 20MA, they could find technical support. Notably, the YM (Dow Futures) and RTY (Russell 2000) touched this level yesterday and bounced, whereas the NQ (Nasdaq) and ES (S&P 500) are still trading significantly above it. A successful retest could signal further upside—while a failed test might trigger renewed downside momentum.
The SP500 Strategy has just entered a long position with a modest profit target, reflecting cautious optimism. For swing traders, it’s advisable to observe today’s market behavior closely: if yesterday’s rebound holds through the cash session, the SP500 Indicator may flip back to green—confirming a bullish continuation. Otherwise, expect more chop ahead.