Phat squiggly lines: Everyone loves an underdog

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The ASX 200 (XJO.ASX) has continued its march higher, defying the odds and rallying to 7,400 points. Considering what’s happening in Europe, China going back into lockdown, talks of 50 bps rate increases in the US and a looming domestic federal election it’s an almighty effort, really. 

We have a strong suspicion that these macro headwinds will start to tire the market out in the coming weeks, especially leading into the notoriously poor month of May. The saying ‘sell in May and go away’ wasn’t created just because it rhymes, and we’re of the view this year will be no different. 

Having said that, there are still plenty of opportunities within the resource space, which is still the most loved at present, with tech stocks continuing to feel the brunt of rising interest rates. 

From a technical standpoint, the market is charging towards the top end of its range and is fast approaching strong resistance around 7,500. We believe a pullback of 2–3% to around 7,250 in the coming weeks is likely, then we’ll have to reassess from there.

It’s worth noting that the federal budget will be released tonight at 7.30pm AEDT with unemployment, wage growth, policies around small business, and fuel being heavily watched with many looking forward to some relief at the bowser. We will be running a special budget-focussed webinar tomorrow at 12:30pm AEDT so be sure to tune into that as we dissect the budget and see what sectors might be impacted.

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. 

S&P/ASX 200 (XJO.ASX)

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: Bank of Queensland (BOQ.ASX) – update

Last week we put out a note on Bank of Queensland with a bullish bias looking for a break higher which, if occurred, would trigger a buy. The stock has been consolidating since, and yesterday edged higher, but still hasn’t quite broken out yet. Although the technical setup is looking good, the stock hasn’t yet pushed through current resistance. We advised against pre-empting a move, being patient, and waiting until ALL the boxes are ticked. 

A break higher from here could see the stock run to $9 fairly quickly which is approximately 7% higher from current levels. We’d expect this move to occur over a 2–4-week period. If this current resistance level holds a move back towards the $8 mark, which is the next level of support, wouldn’t surprise. 

Bank of Queensland (BOQ.ASX) stock chart March 2022

Bank of Queensland (BOQ.ASX)
1.  Triple bottom support holding – stock now range bound 
2.  Triple top resistance forming – stock needs to break higher to warrant any interest

Stock to watch: Pilot Energy (PGY.ASX)

Pilot Energy is a small cap oil and gas explorer that has existing energy assets in Western Australia that are being leveraged to transition into the production of renewable energy – namely blue hydrogen, green hydrogen, ammonium, solar and wind.  

Over the past several months the company has been conducting a pre-feasibility study into the commercial viability of clean energy production in the mid-west. The much-awaited study released yesterday, didn’t read too badly, although the stock was crucified and fell circa 20%. 

Although the price action yesterday was brutal to say the least, it looks like there was one big seller in the market offloading a decent amount of stock which is what led to the hefty decline. The top 20 shareholders own more than 50% of the register and are believed to be long-term supporters of the business, which again leads us to believe it was the tail end of the register that sold.  

The company has outlined a detailed plan to commercialise hydrogen production by 2025 with a phased rollout plan looking to commence once final capex costings have been done. Interestingly, they also have a first-to-market opportunity to produce ammonium by 2025–2027, which will be a game changer if they can execute,  given the projected demand from Asia in the coming years. 

Tread carefully here, but a story worth watching as it all unfolds… 

Pilot Energy (PGY.ASX) stock chart March 2022

Pilot Energy  (PGY.ASX)
1.  Heavy sell-off yesterday has seen the stock now reach support dating back to Dec 2020
2.  Once selling subsides, stock has every chance to move back to $0.05 in the near term


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.