I have been very cautious of late on SiriusXM, and that caution is proving to be prudent... at least at the moment. I do not see SiriusXM taking a massive hit, but I do not see it making a massive run either. The immediate risk is at about $3.53, with the next step being down at $3.41. The EMA's, as I suspected they might do, have turned quite ugly. We now have 4 caution flags and five warning flags. There is nothing pretty to look at here.
I am now very weary about the call this coming Tuesday. This is not going to be the companies best showing. Under normal circumstances the company could essentially bury the bad stuff in the full year numbers, but people are more focused now. The numbers will simply be okay. Yes, there is brightness on the horizon, but the focus now is on current value.
As I have been saying, I may not gain fans with my stance on the Liberty proposal, but this is not about a popularity contest. It is about dollars. This ratio deal is what will be on the table... BASED ON CURRENT VALUE If you are not a fan of Liberty, you can certainly fight the deal, but just be aware of the forces you are up against. Whatever you do, do not rely on message board sentiment to assess the situation. the three dozen or so posters on message boards are a very, very, very, very small minority. The true read on SiriusXM, as well as this deal can not be found on a message board. Yes, you will hear what you want to hear there, but likely will never hear what you need to hear.
PREPARE YOURSELF FOR EACH DIRECTION. I can not stress that enough.
The volume today was higher than average and higher than the previous session. The equity was down on this volume. The technicals are not pretty. Further, I suspect that when SiriusXM does answer the Liberty proposal there will be more confusion than ever... mostly based on the misconceptions laid out by the likes of Ralph Nader. Notice how he quieted down recently? There is a reason. He misread this deal from the start and had a knee-jerk reaction I suspect that when the nature of the deal was explained to him that he decided it was better to fade away and at least see more detail before speaking out again.
If volume continues to increase on this downward skid, we MUST look at $3.41 as a very real possibility. The problem many may have is the fact that selling now may be too late, and what happens if a premium is offered. The savviest investors picked a strategy already. Now we are seeing those that were a bit slower on understanding the deal finally seeing that the initial spike was based on pure misconception.
The EMA's are very tightly wound. As I have stated many times, this condition typically brings about a compelling move. That move is usually in the direction of the trend unless there is a catalyst to reverse the trend. I do not see such a catalyst in the cards. Can you trade around this? The answer is yes... however, you may miss some requirement of the deal if and when it happens.
Support and Resistance
Exponential Moving Averages