Sirius XM has a busy week ahead. The company will be offering up their second quarter conference call on August 4th and the auto sector is expected to announce positive sales figures for the month of July prior to the Sirius XM call. The question on the street is where Sirius XM will come in with their numbers.
What Sirius XM investors need to realize is that an imminent conference call brings about three distinct groups of traders. Those that trade the technicals, those that trade the fundamentals, and those that speculate. In the past, there has typically been a run up going into the call driven by the speculators, and a downward correction driven by those that trade fundamentals. It is not that Sirius XM reports bad numbers, it is just that from a fundamental standpoint there always seems to be some red herring that just doesn't quite hit the right note.
In many ways Sirius XM is a stock going through growing pains. It is not little anymore and full of potential to do anything, but it has not yet produced enough results to make it a stable player in the minds of everyone. Sirius XM is that draft pick that has a lot of raw talent, but does not have enough professional games under his belt to be awarded the franchise player tag. The company has some very bullish believers as well as some very bearish detractors. Thus the tug-of-war we have seen quarter after quarter.
Going into this conference call Sirius XM saw some wonderful moves up on volume. This was a welcomed relief for many long term investors. Unfortunately it was followed by some anemic volume, thus dampening the excitement a bit. Over the past few trading days we have also seem the Exponential Moving Averages shift from bearish to bullish. Today things look very bullish. Another technical positive was that the company broke through a key resistance point at $1.02. The question here is are these technical indicators less valid because of the entrance of the speculators that seem to arrive ahead of every call? Should investors trust the technicals?
What we know is that Sirius XM is still in the middle of a stubborn trading range between $0.92 and $1.10. We could see some more momentum going into the call, but it will take some great headlines on the auto sector as well as a great call from Sirius XM to get the equity above, and keep it above, $1.10. If this is the quarter without the red herring, the SIRI has a chance to run from a technical as well as fundamental standpoint. If this is the quarter that can thin out the speculator herd (bulls and bears), then the key elements of stability can take more control over the reigns.
From a technical standpoint volume is a moderate positive. EMAs are bullish, and support and resistance looks good because all resistance above current levels is very weak. From a historic standpoint, SIRI may have gotten to a bullish technical situation on pre-conference call speculation. It is a tough call, and merits close attention over the next few days.
Position - Long Sirius XM Radio