How to trade the world’s hottest market of 2026

Listen to the audio version of this article (generated by AI).

Today’s issue in preview:

• How to trade the world’s hottest market of 2026

• The price of copper is up 63% over the past three years. Two stocks to invest in the trend continuing

• AI is changing the laws of portfolio diversification. You could be taking huge risks without realizing it.

• Learn our Top Themes to buy now

The price of copper is up 63% over the past three years. Two stocks to invest in the trend continuing.

Credit: tifonimages

The case for owning copper just got a little stronger.

It is enjoying serious relative strength in a weak commodity market.

More on this in a moment, but let’s quickly cover the bull case for copper…

For more than two years, I’ve been personally long the copper mining theme, and I’ve urged others to go long as well. In a September 25, 2025, note, I highlighted the copper mining sector’s bullish price action and reiterated my call to own it.

The bull case here is simple: Demand from AI, power grid builders, renewable energy, and EVs is turbocharging copper demand. Copper is simply a wonderful conductor of electricity with attractive qualities no other material can currently match.

But over the past 20 years, the copper mining industry has discovered or developed few meaningful copper deposits. This is a bullish long-term “rising demand, constrained supply” dynamic.

That’s the bullish forecast, but regular readers know we care a lot more about what the market thinks of fundamentals than the fundamentals themselves. You can believe in a bullish market forecast until you’re blue in the face, but if that market is moving lower, then your forecast isn’t worth a hell of a lot.

In copper’s case, the market likes the bull case. Copper has advanced 63% over the past three years. In June, it broke out to a new all-time high of $6.69 per pound. Trading currently at $6.27 per pound, copper isn’t far off from that high.

That last fact is notable because the past four months have been brutal for most mining and commodity-related industry groups.

Over the past four months, uranium mining giant Cameco (CCJ) is down 23%. The VanEck Gold Miner ETF (GDX) is down 24%. Leading lithium miner Albemarle (ALB) is down 27%. Rare earth mining giant MP Materials (MP) just reached a new one-year low. Silver mining giant First Majestic (AG) is down 27%. Big platinum and palladium miner Sibanye Stillwater (SBSW) is down 38%.

However, physical copper has “bucked” this broad commodity market weakness. As mentioned above, copper is not far from its all-time high reached in June, as shown in the two-year chart below. Plus, top-tier copper mining stocks such as Freeport McMoRan (FCX) and Southern Copper (SCCO) have been much stronger over the past four months than the other mining industry groups.

This is impressive “relative strength” from copper during a period of serious weakness for most mining industries.

The bullish forces detailed above have powered copper to a 63% gain over the past three years. Its recent display of “relative strength” tells us this trend is likely to continue.

How to trade “the world’s hottest” market of 2026

Credit: KanawatTH

In June 2025, semiconductor industry stocks broke out of a sideways consolidation pattern and began a rally for the ages.

During this rally, the world’s largest semiconductor ETF – the VanEck Semiconductor ETF (SMH) gained 147% in just under a year.

Individual semiconductor leaders AMD (AMD), Marvell Technology (MRVL), and Lattice Semiconductor (LSCC) gained more than 200% during that time. Stock gains of 25% in a month became commonplace.

When a sector gains 50% in a year, that’s considered incredible. Semis returned “triple incredible.”

Avid Money & Megatrends readers know what drove those giant returns. Given AI’s enormous promise, large tech firms such as Google (GOOG), Amazon (AMZN), Microsoft (MSFT) and Meta (META) have invested over $1 trillion in AI infrastructure. They are on pace to invest over $700 billion this year alone and more than $3 trillion after that.

Both the scale and the velocity of this investment boom are unprecedented. It is the largest collective investment effort in history.

A lot of this money purchased semiconductors, the tiny “engines” that power computers. Semiconductor industry revenue totaled $793 billion in 2025, an increase of 21% year-over-year, according to Gartner, Inc.

Given its AI drivers and big returns, it’s no wonder semis became the world’s “hottest trade.” And when any theme becomes the world’s hottest trade, it becomes a leading candidate to experience a significant correction or something worse.

That’s just how the stock market works. When a bull market grows very popular and attracts a lot of speculation, it likes to “buck off” market participants by going through a sharp correction or something worse.

That’s what has happened to the semiconductor trade over the past month or so. After soaring from June 2025 to June 2026, SMH has declined 15.6%. Last week, it reached its lowest point in two months.

So, what is next for the “world’s hottest” trade?

Let’s size up this trend and make some “trend health” conclusions.

As you can see in the two-year chart below, SMH share price has declined from the mid-$600s to the mid-$500s. This decline has taken the high-flying SMH to levels last seen in May.

If long-term AI bulls are proven right by the market, SMH will likely “digest” its recent losses by trading in a sideways consolidation pattern for a month or more… and then recover and trade back to the mid-$600 area and beyond.

If the AI bears are right, SMH won’t see that mid-$600-per-share level for years… and we are much better off focusing on other trends.

I’m watching SMH with all this in mind. I lean towards thinking SMH’s decline will prove to be a short-term correction inside a long-term bull market.

However, I place much more weight on what the market thinks about this trend (and every other trend) than on what anyone thinks about it, including me.

With all this in mind, short-term traders should see semiconductors right now as a directionless trade, good for monitoring but not for trading. Long-term bulls, of course, can ignore these short-term moves and stay long. I’ll keep you updated on the former “world’s hottest” trade. It won’t be long before we get meaningful price action that provides direction for trading the semis.

AI is changing the laws of portfolio diversification. You could be taking huge risks without realizing it.

Credit: 2d illustrations and photos

In late 2022 – before ChatGPT was released to the public – I told friends and colleagues that AI was about to explode into public awareness.

Shortly after, AI did just that, marking the beginning of one of the biggest investment themes of our lives… one that has produced dozens of 100%+ stock winners. During this time, I’ve urged investors with multi-year time frames to ignore AI skeptics and stay long the historic AI infrastructure boom.

In other words, I was bullish on AI before it was cool… and I’ve stayed that way for more than three years.

As bullish as I am on AI, I believe most people shouldn’t be “all in” on this trend. Most people should treat their investment portfolio like a sensible diet. It should be balanced and diversified. You want to own some assets that can “zig” when others “zag.” And you don’t want your whole 401(k) to depend on the outcome of one bet.

However, the AI superboom has changed the rules of diversification. For example, many people believe they can diversify their portfolio and take less risk by owning international stocks and emerging markets.

If you or your financial advisor believes this, I have news for you. It’s not the case at all. Over the past few years, AI has changed the laws of financial physics and rendered many longtime strategies and beliefs irrelevant, at least for now.

Although many people like to think that owning emerging market stocks is a portfolio diversifier, the chart below shows that right now, it most certainly isn’t.

The chart below is a 2-year “performance chart” that plots the performance of the Technology Select Sector SPDR Fund (XLK, blue line) and the iShares MSCI Emerging Markets ETF (EEM, green line).

XLK is one of the world’s largest “pure play” tech stock funds. It’s a bunch of stocks that comprise one big AI trade.

EEM is the world’s largest and most popular emerging market ETF. It aims to give investors exposure to markets in Taiwan, China, South Korea, India, and Brazil. It’s a bunch of stocks that comprise… one big AI trade?

Yes, XLK and EEM are highly correlated… so much that they are essentially the same trade. The two funds have moved up and down in lockstep, generating similar returns over the past two years.

AI has become such a pervasive, world-shaping force that EEM – the world’s most popular emerging market ETF – holds big positions in enough AI-exposed tech firms that it now dances to the same tune as a conventional tech stock ETF. Manage your portfolio accordingly!

Market Notes

• Our recommendation to invest in Boomer health care continues to pay off. Senior care firm Brightspring Health Services (BTSG) reached a new all-time high today.

• Railroad giants Union Pacific (UNP) and Norfolk Southern (NSC) reached new all-time highs today. As we covered last week, these are bullish economic signals.

• Oil refining giants Valero (VLO), Marathon Petroleum (MPC), and Phillips 66 (PSX) reached new highs today amid the Iran War, which is constricting refined product supplies.

• Drinkware and cooler giant Yeti (YETI) reached a new one-year high today.

• Restaurant giant and Chili’s operator Brinker International (EAT) reached a new all-time high today.

• Restaurant giant Cheesecake Factory (CAKE) reached a new all-time high today.

Regards,

Brian Hunt
Editor, Money & Megatrends

An urgent message from our colleagues:

1 Stock to Own by July 31st

Get rid of overpriced AI stocks before a scheduled announcement on July 31^st threatens to reshuffle the stock market’s winners and losers. Smaller, lesser-known names are now showing the overwhelming potential to dethrone AI’s Magnificent 7. On July 31^st, this little-known stock in particular could soar while Tesla faceplants.

Get the name and ticker of this stock on your radar now…