Shares of Sirius XM Satellite Radio continue their upward momentum in anticipation of quarterly results that should demonstrate the company is executing well on financial metrics. I have long said that Sirius XM was held back by market uncertainty in their ability to be consistent with performance quarter after quarter. An anemic economy gave more reason for concern to what is already a high beta stock. Throughout 2010 the company has delivered good numbers, and made smart decisions. The question then became whether or not these good results could be maintained quarter after quarter. The pre-release of subscriber numbers gave the needed hints that Q3 results would be good as well. It is consistent results that have allowed investors to gain confidence in the company and the stock price to rise.

Next week Sirius XM will announce their oficial Q3 results. Most are expecting the company to deliver good numbers. The anticipation of good results, continuing the 2010 trend have allowed this equity to break free of the doubt and continue upward momentum. With Q4 typically being a good quarter for satellite radio people are gaining confidence. About two weeks ago I expressed some concern over where the "top" would be and whether or not we would see a re-tracement. At the time the equity was trading at $1.40. We did see a small dip to the low $1.30's, but all in all Sirius XM held the line. The fact that a new base seems to now be established underscores investor confidence.

Another factor investors are anticipating is the status of the Howard Stern contract. Earlier this year Sirius XM CEO Mel Karmazin expressed that he wanted to have an announcement on Howard Sterns contract prior to the Q3 call. As yet this has not happened. More recently Karmazin seemed to hint that the news on Howard may not be announced until later. The Howard Stern contract is a big factor right now. His last deal was worth $500 million over 5 years. The company would love to keep Stern, but the price could be quite high. Depending on the timing and value of the deal we could see the run continue.

Given the quarterly call and Stern announcement, many investors are likely wondering where the top will be. Will the run-up in stock price that we have seen this week continue into next? If there is a Stern announcement Monday or Tuesday there could be a substantial run going into next Thursday's call. If there is no announcement, it could put the breaks on the run and we could see a flat spell. This makes it a tough call for investors who want to protect their gains as well as investors who want to enter into the equity. The best advise is to watch things closely over the beginning of next week.

Either way, there will be a point where the equity is likely to re-trace and investors should be ready. Once the anticipation of the Q3 call and Stern deal wear off this equity will need to take a breather. In my opinion SIRI should be able to hold above $1.30, the levels it tested briefly earlier this week, when the market finally absorbs the company Q3 results and we have clarity on when an announcement on a Stern deal happens. What is the near term top end? That is a tougher call. If a Stern deal is seen as a positive and gets announced before the call we could see the $1.70's or more going to the call.

Position - Long Sirius XM Radio