Sirius XM (SIRI) Technical Review 5-29
It was an interesting week for investors in Sirius XM Radio. The company qualified possible Russel Index inclusion Friday after seeing itself removed from the MSCI Barra Index only days before. Sirius XM has been in a bearish trend for well over a week, yet somehow the equity managed to do what it took to stay above $1.00. The big question on the minds of many is what happens next,
From a technical standpoint Sirius XM Broke through and closed above very strong resistance at $1.02. That very resistance now becomes support. The scary thing is that this action happened on low volume. While $1.02 is still a strong section of real estate, the company sits just above, and Tuesday will give an indication of what to believe.
The various technical indicators are a mixed bag in the short and medium term, and bullish longer term. Many indicators are what is called “neutral” This simply means that more information is needed to determine whether things are bullish or bearish. While this can be frustrating for investors, there are some who thrive in this market by developing their strategy early.
For the past couple of weeks we have been looking at volume, key resistance and support, and Exponential Moving Averages (EMA’s). I will continue that trend this week. From a volume standpoint, with the exception of the day that the MSCI Barra index made their sale, volume has been weaker than normal. This would seem to indicate consolidation without real pressure in either direction. The EMA’s confirm this.
The 5 day moving average is $1.00.
The 13 day moving average is $1.02
The 20 day moving average is $1.03
The 50 day moving average is $1.01
As you can see, these averages are all converging on each other, and while there is a mix of bullish and bearish signals, a mere penny makes a huge difference. With the possibility of the Russerll Index reconstitution we would tend to side with the bulls.
Support and resistance levels are as follows:
Resist. – $1.23 weak
Resist. – $1.14 weak
Resist. – $1.11 moderately weak
Suppt. – $1.02 very strong (be cautious as the equity barely closed above this level)
Suppt. – $0.98 weak
Suppt. – $0.92 moderately weak
Suppt. – $0.89 weak
Suppt. – $0.84 very strong
The key battleground is at $1.02. Sirius XM closed just above this level on low volume and at the very end of the trading day. If the equity moves higher Tuesday, some of the tension that currently exists would dissipate. Weak resistance above should allow the company to move up in an organic manner. Should the equity drop below on Tuesday, there is also a lot of room to flounder. Tuesdays action will be key to giving investors a hint of direction.
Position – Long Sirius XM Radio
Sirius XM is starting to make profits and free cash flow will be improving on a constant basis into the future… The company is getting opportunities not just in cars, but in other new products and might even become global where it will increase revenues even more… This stock was over $5 with far less strength in the past, and today it has become even stronger so it will surpass this stock price relatively easy in the next few years.
I hope your pessimistic assesment is short term. Unless the world goes into another major recession, I can’t see why the money doesn’t just keep rolling in.
I am not pessimistic…..lol
Technicals are supposed to take the emotion out of the process. I believe that the equity will work the upside on the heels of the Russell activity, but there is always risk, and the key is understanding the risk.
support and demand arent specific prices like 1.02 or 1.13. they are tight ranges of prices called zones. think about how people are not necessarily on the same minute chart or time frame but still see a similarity to what u see. it may be off a bit but they still think buy here or sell here. this creates a zone of sellers or a zone of buys. there is a zone for that 1.00 range vs just support at the specific price of 1.02. shoot i will take a penny more or less of i know where it is going, right?
mitch…
LOL….agreed. There are indeed zones. The key is getting into that zone and identifying it. The tendency is to try to narrow a zone down to a specific price so that a strategy can be set into motion.
Cheers
hehe ya i stink with identifying candlesticks and being that aggressive. in time maybe
Pretty decent analysis and well presented. I think the next 90 days are crucial for SIRI. If it is going to move higher, now is the time. I think the odds favor a bullish scenario, but as you point out, there is always risk and one should keep that in mind.