RATE Group | Bitcoin Burst To Hit Semiconductors Soon – iShares PHLX SOX Semiconductor Sector Index E…
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Bitcoin Burst To Hit Semiconductors Soon – iShares PHLX SOX Semiconductor Sector Index E…

11 Aug Bitcoin Burst To Hit Semiconductors Soon – iShares PHLX SOX Semiconductor Sector Index E…

Posted at 02:14h in Bitcoin News by

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Semiconductors were one of last year’s best performing industries as global growth propelled a surge in computational investment by firms worldwide. Semiconductor firms, as seen in the iShares PHLX Semiconductor ETF (SOXX) gained over 42% in 2017 but have struggled to continue their strength into this year. As the SOXX reaches its 2018 resistance zone for the fourth time this year, we believe the industry is a good short opportunity for a trader willing to manage the risk.

Irrational Expectations

Last year’s growth was caused by a surge in demand-driven price hikes in memory chips. This has created not only extremely high valuations across the industry but also extremely high future earnings expectations. Here is the trailing year information on valuation data for the top ten firms in SOXX:

Source: NairuCapital-SOXX

From first glance, the information looks good. While an average PE ratio of about 27 is extremely high. Given earnings growth expectations of 45%, the valuation seems…

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