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Buy the Dip in AMD

Buy the Dip in AMD

The broad market is continuing its massive run higher as the calendar digs into summer.

Year to date, the big S&P 500 index is up more than 17.5% on a total returns basis. Just to put that into perspective, if that breakneck pace kept up for the rest of the year, the S&P would end the year with a 41.5% return.

And momentum is the name of the game in 2019. The stocks that have established leadership positions in this market environment are continuing to lead their peers higher here. Case in point: Advanced Micro Devices  (AMDGet Report) .

AMD has been a serial outperformer since the calendar flipped to January, up more than 65% during that stretch. And from a technical standpoint right now, shares look as if they’re showing investors a buyable dip this week before the next up-leg.

To figure out how to trade shares of AMD here, we’re turning to the chart for a technical look.

AMD’s uptrend essentially kicked off with the new year. Since the final days of 2018, shares of this tech momentum name have been bouncing their way higher in an extremely well-defined uptrend.

The last time we looked at AMD, shares were testing their “buy zone” right at trendline support during the first week of May. In the weeks that followed, AMD bounced off of support, making a 26% move higher before finding resistance up around $34. Now, we’re seeing virtually the same price pattern show up in June.

Simply put, the bounce AMD is showing investors this week looks like a solid buying opportunity.

Risk management remains key, particularly as investors generally become more anxious about the market’s next likely move. The 50-day moving average has been acting like a solid proxy for trendline support, and that makes it a logical place to park a protective stop below, if you’re long AMD.

If AMD materially violates its 50-day, then the uptrend is over and you don’t want to own it anymore.

The word “materially” is key here – AMD spent two sessions right below the 50-day during its prior test of support without busting its trend. It makes sense to keep a reasonably loose leash on this trend given its momentum.

That’s echoed by relative strength, the indicator down at the bottom of AMD’s chart. The uptrend in our relative strength gauge is an indicator that shares are continuing to systematically outperform the rest of the broad market right now. This powerful trend remains in play this summer.

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Watch: What Did the World Look Like Before Photoshop? A History of Adobe

Why Facebook’s Token Is Starting with the $613 Billion Remittance Market

  • Facebook releases its details about Libra
  • Bitcoin soars past most asset classes this year
  • Lightning-powered Bitcoin payments app for iPhone

The world of cryptocurrencies just took a huge leap forward today as Facebook Inc. divulged details about its new stable coin and blockchain, both dubbed Libra.

Backed by a basket of fiat currencies and government securities, Libra’s token use will initially focus on international remittances – a market the World Bank says was worth around $613 billion in 2017.

The Libra blockchain is set for full deployment next year.

“The goal of this new project … is to build a financial ecosystem that can plug in and empower billions of people,” Dante Disparte, head of policy and communications for the Libra Association told CoinDesk.

The Libra Association is actually an independent consortium of 28 founding members, including Visa, Mastercard, PayPal, Uber, Lyft, Coinbase and more, that will come to govern Calibra, a new Facebook subsidiary that’ll be tasked with developing financial services and products around the Libra network. The Libra Association also has several non-governmental organizations that work on digital financial inclusion, such as Creative Destruction Lab, Kiva, Mercy Corps and Women’s World Banking.

Globally, there are about 1.7 billion adults without access to formal banking arrangements – the so-called ‘unbanked,’ who make up nearly half of the world’s adult population.

What’s more, some 70% of small businesses in developing countries don’t have access to credit. And fees for remittance services are high – $25 billion is spent by migrants each year on these fees, Calibra said.

Calibra plans on brining this group of people into the financial fold by starting out with a digital wallet for the Libra coin, which will permit users to transfer funds back and forth, as well as store their tokens.

Essentially, wherever Visa or Mastercard logo are accepted, Libra would also be accepted, Disparte said.

But that’s just the beginning.

Calibra wants to expand to let customers pay their bills and purchase day-to-day goods and services, like a bus ticket or a cup of coffee.

Perhaps even better for users, the plans so far show that users will see transfers in terms of their local fiat currency, instead of the Libra token being used behind the scenes.

Calibra will also following know-your-customer (KYC) and anti-money-laundering (AML) regulations where it conducts business.

Users will have to verify their ID, but they won’t have to have a Facebook account to use it. Nor will their financial data and social media profiles be linked, allowing users the freedom to create multiple accounts.

Check back here for more about the plans for this bold new crypto-project as they continue to develop.

But before this develops further, I have to let you know about a crypto trading research service run by my Money Morning colleague, Tom Gentile.

He and his team have developed a system to track the hottest cryptocurrencies by the week. And they’ve been crushing it.

Just yesterday, Tom recommended to sell off two cryptocurrency positions for up to a total 676% profit.

And he’s got another recommended position lined up and ready to go.

Click here to learn more about how to access it.

Bitcoin Still Soaring

Prices for Bitcoin (BTC) and Ethereum (ETH) climbed in recent days, and have been performing well this year thanks to a variety of positive drivers.

These include the upcoming debut of a Facebook cryptocurrency, exciting updates to Bitcoin’s Lightning Network and Bakkt’s impending testing of its Bitcoin futures contracts slated for July.

Over the weekend, Bitcoin rose back above the $9,000 mark, and reached $9,381 – a 13-month high.

It’s just a bit below that as I write to you now, but the world’s largest cryptocurrency with a market cap of $165 billion has been a tear this year.

As the Wall Street Journal just noted, Bitcoin has broken away from most other asset classes this year, rising 154% compared to the S&P 500’s 15% climb, crude-oil futures’ 16% gain and gold futures’ increase of just 4.8%.

In fact, institutional crypto prime dealer SFOX found that in May, after China said it would raise tariffs on $60 billion of U.S. goods, there was an almost perfect negative correlation between the S&P 500 and Bitcoin.

That makes it an attractive play for institutional investors like pension funds and family offices that are looking to diversify their holdings.

Indeed, JP Morgan Chase & Co. recently said Bitcoin futures contracts on the CME Group and Cboe exchanges are climbing rapidly, from $5.5 billion in April to $12 billion today – another sign institutional players are moving into the space.

Of course, these large investors are responding to a spate of exciting news for the industry.

Facebook’s launch of Libra is likely to help the broader industry in terms of infrastructure buildout, including custody solutions to better store cryptocurrencies, better wallets and improved overall compliance with existing regulations – Facebook has reportedly hired top-flight lobbyists in relation to its crypto push.

The idea here is also that Facebook and its impressive list of corporate backers are bound to offer Facebook’s 2.4 billion monthly active users an easy on-ramp to using cryptocurrencies. Once they’re more familiar, it won’t be as much of a stretch to go to others, like Bitcoin or Ethereum.

A Bitcoin Payments App Comes to iPhone

The hits just keep coming for Bitcoin’s Lightning Network.

Recall that the Lightning Network is helping realize Bitcoin’s original promise as a quicker, cheaper, and more secure daily payment mechanism. And its mass adoption is one reason behind my prediction that Bitcoin (BTC) will eventually reach $100,000.

Now we hear that non-custodial wallet and payment platform, Breez, is launching a Lightning-powered Bitcoin payments app for the iPhone on Neutrino Bitcoin Lightning software.

Now in beta, the app’s developers say they’ve figured out how to dispute purchases and receive payments so as to make just about any type of purchase possible.

After getting installed, Breez automatically opens a payment channel to the Breez hub, which is connected to other Lightning nodes, thus allowing users to transact with anyone else on the network.

If there’s a dispute, both parties can use the most recently signed balance sheet to retrieve their respective share of the wallet, according to CoinDesk.

Breez’s beta app will run on Apple Developer’s TestFlight – once it’s live, the app has the potential to reach about 98% of mobile users worldwide.

“Bitcoin has the potential to make all other mediums of exchange – including crypto and fiat currency – obsolete,” said company founder Roy Sheinfeld.

I couldn’t agree more, which is why the buildout of Lightning has been so intriguing to watch.

An “Intelligent” Way to Play A $190 Billion A.I. Market

An “Intelligent” Way to Play A $190 Billion A.I. Market

Artificial intelligence (AI) is now seeping into every aspect of our lives, from how we interact with our voice-activated digital assistants to how biopharma finds new drugs.

And this year marks a major inflection point in the reach of AI, and the closely related branches of machine and deep learning. Big business is moving quickly to embrace AI to create better products at lower costs and to quickly provide valued-added data science.

Consider that in 2019, The Boeing Co. expects to capitalize on an AI initiative it launched a little more than two months ago in order to make further inroads in advanced computing for commercial and government clients.

Hewlett Packard Enterprise Co. says AI is becoming a critical component of how every company in the U.S. intends to migrate to digital platforms. The company forecasts that by the end of 2019, AI will fuel 41% of those transformations.

No wonder a recent study by Accenture found that in 12 advanced economies with combined GDPs of roughly $61 trillion, AI can double economic growth by 2035. Part of that bump will come from a 40% boost in productivity.

Increases in productivity attributed to AI could even surpass the impact of earlier technological breakthroughs like the steam engine, computers and broadband internet, McKinsey Global says.

And that’s leading to a whole lot of spending – and opportunities to make money – on AI technologies.

Worldwide spending on AI systems will climb 44% this year to $35.8 billion, with some $13.5 billion going to AI software platforms and AI apps, according to IDC.

Plus, AI will really join forces with another critical technology for the U.S. economy – cloud computing – this year. MarketsandMarkets says AI-as-a-service (AIaaS) will be a big driver of a market that will grow more than 36% a year, and be worth $190.61 billion, by 2025.

So it’s clear that AI will have an enormous economic impact on a global scale, and perhaps change the course of economic history as we know it.



But before I show you how to play this exciting new field, let’s start with some basics.

What is AI?

AI can seem like one of those amorphous concepts that everyone’s heard of at some point, but has a different idea about.

When it comes down to it, AI today typically refers to machines that respond to some stimulus like humans might, and thus display some sense of human contemplation, judgement and intention. AI software systems can make decisions that’d normally require a human level of expertise, and aide people in anticipating various problems that arise and need to be solved, which means they can adapt to changing circumstances.

So if that sounds fairly general, so let me give you a real world example.

Take my ski boots. They’re worth a small fortune.

And it’s all about Mellissa…Let me explain.

See, I’m a passionate skier who would really like to be able to tackle the entire mountain – from steep slopes to deep powder to intense forests – like an expert.

As part of my program to improve, I turned to Mellissa for help. That’s the nickname I gave the AI “coach” I recently demoed inside my Tecnica Mach 1 high-performance boots.

The feedback she gave me led me not only to an important personal breakthrough, but the process underscored why I tell tech investors that AI is set to play a major role in all of our lives.

From your mobile phone, tablet and desktop computer to your smart TV and speakers to your car and chat bot, AI is an unstoppable tech force.

And today, I’m going to reveal a beaten down AI leader that is set for a solid market-beating rebound…

Teaching to “Carve”

I first learned of the Carve AI system for skiers from my wife. I had been complaining about the high cost of ski lessons, which run about $450 for a roughly 3-hour session.

The idea behind the $279 Carve system is to harness the power of AI for what the company calls an “adaptive” coaching engine. That means you have an onboard digital coach assessing the quality of your turns, balance and more in real time.

After using Carve for just a half day, I made an important discovery. Mellissa scored my turns to the left as more consistently successful than to the right, but making equidistant turns is essential if you want to ski the entire mountain with confidence.

I’m sharing all this with you today so you know that when I say AI is set to change many aspects of our lives, I speak from personal experience.

A $190 Billion Market

I’m not the only one who sees big money in this field. While MarketsandMarkets says just cloud-delivery of AI systems will be worth $190 billion in six years, I believe that’s on the low end.

Fact is, companies all over the world are building AI into their products and services, as well as into backend platforms that improve productivity and profit margins.

And I have uncovered a fallen tech star that is grossly oversold but offers huge upside, in no small measure because of its cutting-edge, AI-centric devices.

A Brilliant AI Future

I’m talking about Nvidia Corp. (Nasdaq:NVDA).

This chip maker is better known for its gaming offerings in graphic processors (GPUs). But it also makes sophisticated devices that are tailor made for AI.

And the range of industries looking to build in more AI smarts is pretty staggering. Healthcare, life sciences, energy, financial services, higher education, defense, manufacturing, and entertainment are all looking to AI to help drive innovation.

Nvidia’s bold moves here didn’t come cheap. The firm spent $2 billion in research funds to develop its current line of AI chips. It’s an investment that should generate massive returns in the years ahead.

Nvidia’s Tesla P100 chip, for example, uses15 billion transistors, or twice as many as the firm’s previous industry-leading chip, the Maxwell.

To show off its muscle, Nvidia packed eight of these chips and state-of-the-art AI software into a $129,000 computing beast called the DGX-1. It’s basically a sleek AI computer server optimized for deep learning and analytics accessible through cloud tie up with Nvidia.

The system comes with built-in software, and onboard tools that are designed to enhance collaboration. Nvidia says it set six records in AI performance, including object detection and image classification.

Firing On All Engines

Of course, there’s more going on here than AI since Nvidia builds a wide range of souped-up GPUs. It offers us plays on data centers, machine learning, and healthcare, to name a few.

But just to give a sense of the upside ahead, let’s take a look at the company’s foray into one of its biggest markets – self-driving cars – and the coming auto standard that will affect nearly all of us.

Analysts say that by 2025, nearly every one of the more than 80 million cars made each year will be supercomputers on wheels. Nvidia’s powerful GPUs have been tweaked to deliver robust performance, and now underpin a platform known as advanced driver’s assistance systems (ADAS).

These systems help make humans much better drivers, with such features as heads-up displays in the dash or infotainment centers, lane-return assistance, collision avoidance, voice-guided navigation and adaptive cruise control that keeps the car in pace with those around it.

It’s a great market for Nvidia. Grandview Research says this segment is growing at 19% a year, and will be worth $67.4 billion by 2025.

Nvidia is working with such automakers as AudiMercedes BenzTesla, Toyota and Volvo… The list of auto suppliers would run several pages. Nvidia also has partnered with several makers of heavy-duty trucks to get them ready for driverless deliveries.

Poised for a Rebound

In other words, this is at least a great twofer…

But let’s be clear. All great growth firms hit speed bumps on their road to massively higher sales. And Nividia surely fits the bill. The firm had around $2.2 billion in sales in the fourth quarter, which was well below estimates.

Shares fell more than 10% on the news, and now trade for just half of their of their 52-week high. As a long time Nvidia watcher, I see this as a great opportunity.

See, Nvidia still managed to grow a hefty 40% in 2018, which is even faster that 2017 growth rates. And while Wall Street now thinks that sales growth will slow to 20% in 2019, know that Nvidia has ended up growing at a far faster pace than what Wall Street had forecast at the beginning of the year.

And I firmly believe the current year will be no exception.

In fact, I’ll boldly predict that Nvidia will have nearly $5 billion in adjusted earnings this year, up from $2.4 billion in 2017.

Fact is, all of the elements are in place for a sharp rebound. If shares just moved back the recent five-year high, we’re looking at a double from here.

To your profits,

Wall Street Probe

Intel Is Back in Breakout Mode This Spring

Intel Is Back in Breakout Mode This Spring

It’s been a banner year for the stock market – since the calendar flipped to January, the big S&P 500 Index has charged 16.5% higher on a total returns basis, a pace that would put the broad market up more than 40% if it kept up for the rest of 2019.

But not all stocks have benefitted equally from the massive market tailwind that’s been in force this year.

Case in point: Intel Corp. (INTCGet Report) .

Intel has totally failed to participate on the rally year-to-date. So far, on a price-only basis, shares are slightly below breakeven in 2019. That’s some pretty awful underperformance during a year when most stocks have been moving higher.

But Intel’s laggard status looks like it could finally be about to change. After failing to catch a bid for most of this year, shares are finally starting to show some signs of life.

To figure out how to trade Intel from here, we’re turning to the charts for a technical look.

Intel’s price action year-to-date hasn’t been a clear-cut bearish story. Instead, Intel actually kicked off the year on a strong note, surging higher in the first three-and-a-half months of 2019 before rolling over on the heels of first-quarter earnings at the end of April.

Shares continued to push lower through May, but it looks like buyers are finally back in control of things here.

Intel spent most of May forming a rounding bottom, a bullish reversal setup that looks just like it sounds. The rounding bottom signals a gradual shift in control of shares from sellers to buyers – it triggered on a breakout through $46, the price level that marked the top of the trading pattern in addition to being a technically significant level last fall.

The breakout above the $46 level opens the door to more upside ahead.

That’s confirmed by Intel’s much longer-term price trajectory:

Intel has been holding onto a well-defined uptrend since the end of 2017, and while this spring’s correction has been the most volatile drop during that time frame, shares are catching a bid like clockwork right at trend-line support for the sixth time.

Simply put, if history is any indication of Intel’s likely moves from here, shares are heading back up and to the right. Prior tests of support haven’t been followed by immediate rallies – expect to see a couple of touches of trend-line support before the next move to the top of Intel’s channel. That provides ample opportunities for buyers to build a position in this tech giant before the next surge higher.

What Your Innovation Process Should Look Like

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What Your Innovation Process Should Look Like

Executive Summary

For innovation to contribute to a company or government agency, it needs to be designed as a process from start to deployment. When organizations lack a formal innovation pipeline process, project approvals tend to be based on who has the best demo or slides, or who lobbies the hardest. A canonical Lean Innovation process inside a company or government agency would include sourcing, curation, prioritization, hypothesis testing and exploration, incubation, and integration.

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Companies and government agencies often make the mistake of viewing innovation as a set of unconstrained activities with no discipline. In reality, for innovation to contribute to a company or government agency, it needs to be designed as a process from start to deployment.

When organizations lack a formal innovation pipeline process, project approvals tend to be based on who has the best demo or slides, or who lobbies the hardest. There is no burden on those who proposed a new idea or technology to talk to customers, build minimal viable products, test hypotheses or understand the barriers to deployment. And they count on well-intentioned, smart people sitting in a committee to decide which ideas are worth pursuing.

Instead, what organizations need is a self-regulating, evidence-based innovation pipeline. Instead of having a committee vet ideas, they need a process that operates with speed and urgency, and that helps innovators and other stakeholders to curate and prioritize problems, ideas, and technologies.

This prioritization process has to start before any new idea reaches engineering. This way, the innovations that do reach engineering will already have substantial evidence — about validated customer needs, processes, legal security, and integration issues. Most importantly, minimal viable products and working prototypes will have been tested.

A canonical Lean Innovation process inside a company or government agency would look something like this:

Innovation sourcing: Over a period of days, a group generates a list of problems, ideas, and technologies that might be worth investing in.

Curation: For a few days or even a week, innovators get out of their own offices and talk to colleagues and customers. As the head of the U.S. Army’s Rapid Equipping Force, one of us built a curation process to help technology solutions to be deployed rapidly. It included both an internal and an external survey, the goal of which was to find other places in the business where a given problem might exist in a slightly different form, to identify related internal projects already in existence, and to find commercially available solutions to problems. It also sought to identify legal issues, security issues, and support issues.

This process also helped identify who the customers for possible solutions would be, who the internal stakeholders would be, and even what initial minimum viable products might look like.

This phase also includes building initial MVPs. Some ideas drop out when the team recognizes that they may be technically, financially, or legally unfeasible or they may discover that other groups have already built a similar product.

Prioritization: Once a list of innovation ideas has been refined by curation, it needs to be prioritized. One of the quickest ways to sort innovation ideas is to use the McKinsey Three Horizons Model. Horizon 1 ideas provide continuous innovation to a company’s existing business model and core capabilities. Horizon 2 ideas extend a company’s existing business model and core capabilities to new customers, markets or targets. Horizon 3 is the creation of new capabilities to take advantage of or respond to disruptive opportunities or disruption. We’d add a new category, Horizon 0, which refers to graveyards ideas that are not viable or feasible.

Once projects have been classified, the team prioritizes them, starting by asking: is this project worth pursing for another few months full time? This prioritization is not done by a committee of executives but by the innovation teams themselves.

Solution exploration and hypothesis testing: The ideas that pass through the prioritization filter enter an incubation process like I-Corps, the system adopted by all U.S. government federal research agencies to turn ideas into products. Over 1,000 teams of our country’s best scientists have gone through the program taught in over 50 universities. (Segments of the U.S. Department of Defense and Intelligence community have also adopted this model as the Hacking for Defense process.)

This six- to ten-week process delivers evidence for defensible, data-based decisions. For each idea, the innovation team fills out a business model — or for the government, mission model – canvas. Everything on that canvas is a hypothesis, and the I-Corps model is designed to test each one. This not only includes the obvious — is there product/market or solution/mission fit? — but the other “gotchas” that innovators always seem to forget. The framework has the team talking not just to potential customers but also with regulators, and people responsible for legal, policy, finance, support. It also requires that they think through compatibility, scalability and deployment long before this gets presented to engineering. There is now another major milestone for the team: to show compelling evidence that this project deserves to be a new mainstream capability and inserted into engineering. Alternatively, the team might decide that it should be spun into its own organization or that it should be killed.

Incubation: Once hypothesis testing is complete, many projects will still need a period of incubation as the teams championing the projects gather additional data about the application, further build the MVP, and get used to working together. Incubation requires dedicated leadership oversight from the horizon 1 organization to insure the fledgling project does not die of malnutrition (a lack of access to resources) or become an orphan (no parent to guide them).

Integration and refactoring: At this point, if the innovation is Horizon 1 or 2, it’s time to integrate it into the existing organization. (Horizon 3 innovations are more likely set up as their own entities or at least divisions.) Trying to integrate new, unbudgeted, and unscheduled innovation projects into an engineering organization that has line item budgets for people and resources results in chaos and frustration. In addition, innovation projects carry both technical and organizational debt.

Technical debt is software or hardware built to validate hypotheses and find early customers. This quick and dirty development can become unwieldy, difficult to maintain, and incapable of scaling. Organizational debt is all the people and culture compromises made to “just get it done” in the early stages of an innovation project. The answer is refactoring, which is an engineering term that describes fixing code to make it more stable. In the process of refactoring, the engineering team helps fix technical debt by going into the existing code and restructuring it to make the code stable and understandable. Fixing organizational debt means “refactoring” the team – the innovation team that built the prototype may not be the right team to take it to scale, and is more valuable starting the next innovation initiative.

This refactoring stage requires that engineering build a small, dedicated refactoring team that’s focused on moving these validated prototypes into production. In addition, to solve the problem that innovation is always unscheduled and unbudgeted, this group has a dedicated annual budget.

By now, most organizations have concluded that they face the threat of disruption. Some have even started to realize that because technological advantage degrades every year, standing still means falling behind. Hence the interest in innovation, complete with hip innovation labs complete with fancy coffee machines. But done right, innovation requires a rigorous process. It starts by generating ideas, but the hard work is in prioritizing, categorizing, gathering data, testing and refactoring.

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