When the exponential moving averages contract to a point that they were all on top of each other it usually means that a decent move is in the cards in one direction or another. Typically that move is simply looking for a catalyst and is based upon news in one form or another. With SiriusXM upping subscriber guidance and getting ready to report what should be a good quarter, it would have seemed that the stars were aligned to have the break be to the upside. Instead, we got news that the company lost a legal battle over pre-1972 recordings and the move happened to the downside.
I always try to give the downside exposure. In essence, I try to give targets that investors should watch for. SiriusXM broke down slightly, but not so much as to send this equity on a spiral. We now sit at $3.42 with the EMA chart looking very ugly. That being said, the EMA's are still pretty tight and there is potential that we can recover. The risk below is at $3.37. If that breaks look for $3.31 or so to come into play. The critical point above is to get over $3.46. This would get the equity above the 100 day EMA and allow for a chance to see the 100 day EMA get above the 200 day EMA. That would be bullish. If there was a time for stock buybacks to support this equity, it is now.
We want to see a move above $3.46 on volume greater than 40 million shares, and preferably greater than 50 million shares. September auto sales were decent and SiriusXMN announced its intention to appeal the legal issue. I think that the quarterly report is going to offer surprise. If this equity can get itself above $3.50 and close to $3.60 leading into the quarterly call, I think it can grow some legs. The trick is getting to the end of this month with a bullish stance leading into the call.
Support and Resistance
Exponential Moving Averages