The trading action on Sirius XM yesterday had a lot of people a bit nervous. The equity closed directly on the $1.09 support/resistance level, only one step away from weak support at $1.02. Typically such activity is not real concerning, but this time the equity happens to be in the midst of trying to regain NASDAQ compliance, and staying above the $1.00 mark is paramount.
Today that sound you hear are sighs of relief as the stock moved up above $1.10 and seems to be consolidating. That is good news because should the stock hold this level, there are now two support levels below. One at $1.09 which is moderate, and another at just above $1.00 which is now a bit stronger than it was yesterday.
Above current levels is resistance at $1.14. In a perfect world the equity would spend a few days consolidating and building a stron foundation for another move up. While I have no crystal ball, this looks like it will happen. As all of this happens, some other stars seem to be aligning:
1. Car sales for April should be good as consumer friendly incentives continue. Already projections are for sales to be just over 1,000,000 units with a SAAR rate between 11 million and 12 million. These numbers are above the numbers used by Sirius XM in developing and issuing their guidance. This means the company should be ahead of guidance, and perhaps will make adjustments.
2. Sirius XM has been quiet on the Q1 conference call date. i like this because it takes the call out of the equation during this run for compliance. The call is anticipated early in May. Subscriber numbers are already known, as is churn. Hopefully the company will announce the call sometime after Tuesday.
3. Timely news from the company and numbers that show that Sirius XM is on track can allow for the equity to build on their foundation at $1.10 to $1.12. Because decent numbers are anticipated, the speculative traders may want to position themselves for a small pop in the stock, rather than a let-down. This could build volume and an appreciation of the stock price.
In my eyes, the company needs to gain compliance by staying over $1.00 until Tuesday. I see them building support at current levels until then, and the moving up above $1.14 to build additional support leading into the call. Conference calls always make for interesting trading, so it could be harder for the company to get into the $1.20's, but it is possible. What I will be watching closely is the volume the stock has at the various stages. Any move on moderate to low volume will not have the legs to last. We want to see 100,000,000 plus shares traded at the key levels on a consistent basis to build strong support. Of course, this is speculation, but it my two cents for the day. Monday will be a new day, with new data to digest.
Position - Long Sirius XM Radio