SiriusXM remains in a bullish stance and seems to be holding the $3.30's, but not all are convinced that this equity can make a run, get above the 100 day and 200 day EMA's, and continue up from there. In fact, short interest in the equity has increased in a substantial way. Short interest on May 15th was at 197 million shares. As of May 30th, the short interest increased a whopping 110 million shares to levels we have not seen in quite some time. Short interest now stands at 307 million shares. It would appear that the exodus of shorts when Liberty made its offer are now back in town.
As I have discussed several times, the move we want to see is one that gets us above the 100 day and 200 day EMA's. Ultimately we want to see the 100 day EMA get itself above the 200 day. That will take some time, but could happen IF we see the equity gain some running legs. Instead, we appear to be somewhat range bound. The technicals say bullish, but a big change in short interest could mean that some substantial players have little fear of a substantial run.
This could be a case of SiriusXM wanting to have its cake and eat it too. Over the past several quarter we have see the company want to shift focus to new metrics. ARPU is "less important", gross subscriber additions are "less important", and EBITDA is "less important". Self Pay subscriber additions is "more important", Free Cash Flow is "more important". The problem is that the shift to these focal points is not easy. Compounding the issue is that sometimes the company brings us back to the old important metrics when it suits the need to show something impressive. Bottom line is that the business model is maturing, the growth curves are flattening, and the street has a confusion over importance. That will impact the equity until the street does indeed shift focus, and the company can show great potential in the new metrics they want the street to focus on. Believe it or not we are seeing a combination of growing pains and maturing pains.
The volume is still not typical, and it appears that some recent high volume days have been short action rather than long action. Clearly bets are being hedged.
Support and resistance is interesting. We have strong support just below current levels and strong resistance just above. Obviously, holding the $3.30's is paramount. Breaking into the $3.40's is what we want to see, but it will take even more doing if the short side of the house is betting so heavily.
Support and Resistance
Exponential Moving Averages