Phat squiggly lines: Cannabis and controversy


The ASX 200 (ASX.XJO) has had one of the strongest months in years with March returning approximately 6%. This is an incredible effort when you factor in all the macro headwinds currently at play.

The Federal government handed down the budget on Tuesday night with infrastructure and defence the two major winners with nearly $30 billion going towards those respective sectors.

A technical ASX market overview

From a technical standpoint, the market is now at strong resistance and is looking tired after rallying to near all-time highs over the past couple of weeks. We’re of the view the market will make its way back down to 7,250 in the near term which is the next level of support, and seems logical given the current environment.

We believe now is the time to be an active investor and to be selective with what stocks you add going forward. Having a solid trading plan in place, especially for scalping or short-term trading, can improve results and reduce losses, so traders are encouraged to stick to their trading rules and strategies.

1. Short-term resistance in place around recent high of 7,500
2. Recent low and support around 7,000
3. Market still range-bound and looking likely to retest 7,250 in the coming days or weeks

Stock to watch: Beforepay (B4P.ASX)

Beforepay has arguably been the most controversial listing in the past several years and has been in the media for all the wrong reasons. I honestly don’t think I have seen a stock be more crucified by both the market and the media in nearly 20 years of being a trader.

Many have labelled the business model and concept as ‘unethical’ which may or may not be true, but the market certainly believes there are some question marks around it given its poor performance since listing.

The stock debuted on the ASX in January of this year in emphatic fashion, falling circa 45% on day one, and it’s been one-way traffic from there, with sellers dominating almost every day. The stock, however, is now trying to find a base around current levels and looks interesting from a technical perspective.

From here we’re expecting a quick 10% move higher back towards $1 and would reassess from there. There is still strong downward momentum, but the technical setup suggests it is likely to go higher from here in the short term.

We’ll be hosting the CEO James Twiss next Wednesday evening which should be a really interesting session, and anyone not signed up for that event is encouraged to do so as it will be a great opportunity to ask any questions you may have about the business directly to the man steering the ship.

1. Recent low and new level of support
2. Short term target of $1

Stock to watch: Ecofibre (ASX.EOF)

Next Wednesday we will also be hosting one of the most decorated leaders in corporate Australia, Vanessa Wallace. Vanessa is Non-Executive Chair of Ecofibre, who are an Australian-listed biotech company that produces and sells hemp-derived products to consumers and retailers in the United States and Australia. The company's products include cannabinoid oil and nutraceuticals as well as hemp-derived food and textiles. Vanessa is also a non-executive director at Seek (SEK.ASX) and Wesfarmers (WES.ASX) so will be bringing a wealth of knowledge and experience to the session – all the more reason to register for the event if you haven’t already!

EOF’s share price has had a rough trot over the past couple of years but looks interesting at current levels from a technical standpoint. After breaking above the 50-day moving average earlier this week, the stock looks like it’s forming a nice base around $0.45 with a move back towards $0.55 in the coming weeks is a very likely scenario. If the stock rolls over from here, we’d expect a retest of its most recent low and level of support at around $0.38 and would need to reassess from there.

If you're interested to hear from Vanessa herself, make sure you sign up for next week's webinar.

1. Recent low and level of support around $0.38
2. Stock has recently broken above the 50-day moving average
3. Looking for a move back towards $0.55 in the coming days or weeks

Hold on a sec! You should consider whether any advice here is right for you. We don’t accept any responsibility for the accuracy of any information, opinions, or predictions we’ve provided, and we certainly haven’t taken your personal financial situation into account. Just a heads-up.