The technical signals on Sirius XM (NASDAQ:SIRI) that I asked readers to watch for are are happening. The events over the last day and a half have demonstrated why it is important to monitor the situation closely, as well as why a few different indicators can be very helpful in navigating the trading landscape. The natural question on everyone's mind today is whether Sirius XM can hold $2.00.
This brings me to an oft overlooked technical indicator. Volume. In simple terms volume simply represents the number of shares traded on any given day. More savvy traders look at volume to indicate the strength or weakness in a move. Sirius XM has been trading on very light volume for two days. Light volume typically means that a move lacks conviction or that consolidation is happening.
The key level of $2.10 that I have spoken of for several reports now represents strong resistance. With Sirius XM breaking below this level, even on light volume, another battle will have to happen at or near that level. This means that a lot of the market energy that could have sent this equity toward $2.25 will now need to be expended on trying to topple $2.10 again. All is not lost, but the battle is not a cake walk either.
Current support at just above $2.00 is not very strong. It will gain in strength if Sirius XM can hold above $2.03 today. This does not take a possible dip down to $1.92 out of the cards. Investors should be aware of this and prepare accordingly. A good trading opportunity may be in the cards.
Overall Sirius XM still exhibits a bullish stance, but there is some minor weakness showing in the short term. The closing price yesterday, and it appears to be the case again today, now sits below the 5 day and 13 day Exponential Moving Averages. This is bearish in nature despite the fact that all successive averages are above each other. What the EMA chart shows now is the first and earliest signs of weakness. It could be the stock taking a breather (which is what I believe is currently the case), or a developing reversal. Seeing these signs early and watching closely is the best way to gauge the technical indicator.
So can Sirius XM hold $2.00? The answer to that is not as simple as it may seem. Step one to holding $2.00 is a close above $2.03 today. Step two keeping above $2.03 again tomorrow. If Sirius XM can do that, it could build strong enough support to hold off a dip below the all important $2.00 mark. If it does not happen, there is not a lot to worry about as support at $1.92 is strong. In my opinion this stock is still poised to run, but getting above $2.10 will take up a lot of the energy. With news it can further, but any price above $2.15 will be hard to hold for long as earnings are around the corner. Sirius XM reporting a good quarter can allow this stock to build and consolidate above $2.10 and set it up for a push once again. Sirius XM tried to make the push but had a false start. Stick around, this could get interesting.