Can Earnings Season Extend Our Shutdown Gains?

The Federal government is coming back online this morning following a temporary agreement to end the longest shutdown in our nation’s history.

We were treated to a little Friday morning drama just before the shutdown ended with flight delays reported at LaGuardia, Philadelphia International and Newark Liberty airports due to air traffic control staffing shortages. By early afternoon, Trump was on TV to announce the agreement.

My guess is these flight delays on the East Coast and another round of missed paychecks for more than 800,000 federal workers caused enough pain to force the White House and democratic leadership to turn on the lights as they continue to negotiate a permanent end to the shutdown.

Everything’s back to “normal” — until the new Feb. 15 deadline.

But as the shutdown spectacle falls off the front page, should we sell the news?

It’s no secret that stocks have bounced off their lows, posting a strong comeback move since the shutdown officially started 35 days ago. I’ve even showed you how the S&P 500’s double-digit gain is its best shutdown performance in history.

But there’s a case to made that we’re simply experiencing a powerful bear market rally that will soon give way to another leg lower. After all, the major averages remain well below their all-time highs. Now that the oversold rally has spent the past week consolidating, every trader in the country is anxiously waiting to see if stocks will power higher — or break down.

SPX

That’s setting us up for a pivotal week. Major earnings announcements from Caterpillar, Apple, Boeing, Facebook, Microsoft, Amazon and many more are on deck. Plus, we have a Fed meeting to contend with on Wednesday.

Strap in — it’s going to be a noisy week. We have to prepare to react to whatever the market throws our way…

As a busy earnings week kicks off today, America’s farmers are also prepping for their own comeback play.

Hemp is back!

The Hemp Farming Act of 2018 was just signed into law as part of a U.S. agriculture bill and allows the farming of hemp in the U.S. for the first time in decades.

Hemp’s gotten a bad rap due to the drug war and its similarity to its psychoactive cousin, THC-bearing cannabis. But that stigma is quickly evaporating, giving farmers a shot at taking the plunge on what could a be an incredible new cash crop.

“The signing of the bill could create a profit boom for medical marijuana companies with CBD products for sale on the open market,” our cannabis expert Ray Blanco explains. “Once the dust settles, companies operating in the CBD space will be able to procure new sources of potentially cheaper hemp-derived CBD, rather than limit themselves to imports.”

Of course, the implications for medical marijuana plays are also huge.

“I expect many of these companies to perform exceptionally well this year thanks to this and other catalysts,” Ray continues.

In fact, Ray has just uncovered something last week that was even more groundbreaking than legalized hemp. You can get the details by clicking here.

Finally, Bitcoin is quietly slipping toward its December lows.

Bitcoin is hovering just above $3,500 this morning, flirting with another breakdown that could sink the flagship cryptocurrency back toward its recent lows near $3,200.

Another Leg Down

But bitcoin apparently has bigger problems to contend with these days. According to JP Morgan, it’s no longer cost-effective to mine for crypto.

The production-weighted cash cost to create one Bitcoin is now averaging just over $4,000 globally, JP Morgan notes. With bitcoin currently trading almost $500 below this mark, it’s now impossible for some miners to make a profit.

But note how the JP Morgan is citing a global average. There are still some winners in this bitcoin mining game who can cheaply harness electricity…

“Low-cost Chinese miners are able to pay much less — the estimate is around $2,400 per Bitcoin — by leveraging direct power purchasing agreements with electricity generators such as aluminum smelters looking to sell excess power generation,” Bloomberg notes, citing the JP Morgan report.

Access to cheap power is becoming critical for bitcoin mining operations as prices remain depressed. Unless you’re running your own hydroelectric plant, it doesn’t look like you’ll find a cost-effective way to mine crypto in the U.S. anytime soon.

Sincerely,

Greg Guenthner

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Greg Guenthner

Greg Guenthner, CMT, is the editor of Opening Bell Fortunes and Seven Figure Signals. He has been with Agora Financial/Seven Figure Publishing since 2005. In 2019, the average position in Greg’s Sunrise Fortunes portfolio outperformed the S&P 500 by 1.65x.

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