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Crypto Just Sent You a Friend Request

Bitcoin is heating up early this morning as the flagship cryptocurrency breaks above $9,000 to post new 52-week highs.

Bitcoin has gained more than $1,000 in a little more than a week, breaking above $9,000 over the weekend and extending its run toward $9,300 early this morning. The move is the latest in a series of strong breakouts for bitcoin, which has more than doubled since it first ramped above $5,000 in early April.

BTC

Is this fresh bitcoin rally the real deal? Or is it set to flame out after going parabolic like we witnessed during the last massive crypto bubble in 2017?

I don’t have an answer to these questions just yet. But it certainly feels as if crypto is inching into the mainstream. Just ask the folks at Facebook Inc. (NASDAQ:FB).

That’s right — even social media is getting into the crypto game. In fact, we just learned late last week that Facebook is raking in millions of dollars in funding to launch a new cryptocurrency called Libra.

Uber, MasterCard, Visa, PayPal, and other big-name corporations have pledged to invest $10 million each into the venture, The Wall Street Journal reports.

“Facebook won’t directly control the coin, nor will the individual members of the consortium—known as the Libra Association,” The WSJ notes. “Some of the members could serve as ‘nodes’ along the system that verify transactions and maintain records of them, creating a brand-new payments network, according to people familiar with the setup.”

That sounds complicated — but it’s not hard to imagine why Facebook would want to tap into crypto. If the social media giant can subvert the credit card networks and track your spending habits, Mark Zuckerberg and his pals will control your money as well as your eyeballs.

Of course, Facebook rallied on Friday following these crypto revelations. The stock jumped more than 2% on the day, erasing its early June drop.

Unfortunately, not all tech stocks were as lucky…

Three months ago, I asked if semiconductors were ready to retake their rightful position as market leaders.

Judging by the action we’ve witnessed this month, the answer is an emphatic no.

The VanEck Vectors Semiconductor ETF (NYSE:SMH) posted an extremely volatile breakout to new all-time highs back in late March. But the semis quickly ran out of steam and fell back into their four-quarter correction trading range just a few weeks later.

Back during the first quarter, it looked as if the semis were poised to single-handedly pull the Nasdaq out of its funk. But those pesky earnings numbers are starting to take their toll on some of the biggest names in the sector.

Friday was an especially bad day to be a chipmaker. Broadcom Inc. (NASDAQ:AVGO) kicked off the selling by dropping almost 6% after revealing a disastrous earnings report where it missed projections across the board. Management blamed the miss on a “’broad-based’ slowdown in demand and the U.S. crackdown on Huawei,” CNBC reports.

Broadcom’s earnings disaster triggered a wave of selling across the sector. Advanced Micro Devices (NASDAQ:AMD) finished the day lower by more than 3%, while the struggling NVIDIA Corp. (NASDAQ:NVDA) dropped almost 2.5%.

Bottom line: the semiconductor sector has officially blown its lead over the Nasdaq Composite. The group was up nearly 37% on the year when it peaked in late April. It’s now dead even with the Nasdaq — up a little more than 17.5% year-to-date.

SMH

I see no need to hold semiconductor shares in our portfolio following this month’s “pop-and-drop” performance. Let’s ditch our VanEck Vectors Semiconductor ETF (NYSE:SMH) and NVIDIA Corp. (NASDAQ:NVDA) positions and move on to better opportunities.

Sincerely,

Greg Guenthner

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Greg Guenthner, CMT, is the editor of Rude Awakening PRO and Seven Figure Signals. He has been with Agora Financial/Seven Figure Publishing for 13 years. In 2018, Greg’s Rude Awakening PRO portfolio beat the S&P 500 by 14%.

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