After a virtual drubbing over the past couple of weeks, the satellite radio stocks of Sirius and XM saw a boost today that gave investors a bit of a break, and perhaps even set the tone for a good weekend.

The natural question happening at this point is why did this sharp upturn happen? As with anything there can be many answers and theories. Theories from FCC votes being leaked to shorts covering for the weekend, to market manipulation are all ideas that people seem to love to discuss.

Personally, I look at the upturn in both Sirius and XM and see something interesting. Sirius was up more than XM. Thus, the arbitrage spread actually got larger in the last couple of hours of the day. This activity could give legs to the theory that shorts are covering. One popular arb play if you felt the merger would pass was to go long XM and short SIRI.

I also consider the fact that the Draft Order has been issued, and that there is speculation that we could begin to know commissioner stances by mid next week.

Combine these two theories, and it is possible that we are onto something. How much upside this can deliver is yet to be seen, but Monday will be a day that investors in the sector may want to pay attention.

Even with a nice jump late Friday afternoon, neither equity reached levels of the trading channel that existed for most of the merger process. Thus, satellite radio is still in a bit of "no-mans land". Below the trading channel and above the $1.75 price target of Wienkes. If the equities hold their ground, we may not see a new report from the Goldman Sachs analyst, which was something I was looking for to help establish a bottom. Without an established bottom, there is still some trepidation out there that investors may want to consider.

Over the next few days, some information will become available that may also impact SDARS. OEM's will be reporting June sales early next week. One factor that has satellite watchers nervous has been the continued downtrend in vehicle sales. If a bad trend continues, satellite investors will want to be on top of the news as it begins to come out. Not only will the June sales represent a month, but Q2 as well. With 6 months now gone, this would be the time that analysts would be sharpening their pencils and going through their assumptions. Some analysts have already projected that the retail channel for Sirius will be better than previously assumed. Solid news on the OEM channel will be a focus now as well.

Sector watchers should follow FCC activity, the OEM numbers, the arb spread, as well as the trading volume. Things could be ready for a change, and now is not the time to take your eye off of the ball no matter what your investment strategy.

Position - Long Sirius, XM.