SiriusXM Sets New Technical Range
Well SiriusXM (NASDAQ:SIRI) came down a bit from the highs of yesterday, but the stock performed well. Volume was much lighter than Wednesday but was still well above average. While it is hard to say things are looking fine on a down day, that is exactly where we are at the moment. I would still like to have more data to work with in this range, but alas that is not the case.
Volume
As stated, volume came in well above average which is a decent sign. Despite being down, this volume helps to establish the relative strength of support and resistance levels, which in turn give us a better understanding and ability to predict behavior. One key to watch for in the coming days is how quickly volume tapers off, and where volume bottoms out. Again, this is something that helps to reinforce other indicators.
Support & Resistance
Here things get a little bit interesting. There are a few things that happened today that we want to make special note of. First was that Sirius XM was unable to go to $2.50 today, and the open was only a penny lower than the high of the day. Second was that Sirius XM had a low of the day of $2.33, just below the key price of $2.35 I mentioned in yesterdays report. Third, Sirius XM closed at $2.40, just below the highest level of support/resistance identified in previous reports. What does all of that mean?
I still see $2.26 or so as a possible consolidation point that will establish the next foundation for SiriusXM. The company has not had enough “experience” at current levels to to hold that line. It does not mean that it was not deserving of getting to $2.50, it simply means that the levels there need some testing and confirmation. For hose that subscribe to the “short” influence and a “short squeeze”, todays action put an end to that process if it indeed existed. Beware, the equity was a prime short candidate in yesterdays trading. Shorts do not simply disappear, they play the ranges. Sirius XM essentially bouncing off of $2.35 was a good sign for that level. The strength of that level is not huge, so that is why I am holding to $2.26 as a consolidation point. In my opinion $250 now represents resistance with $2.40 developing into that as well if the equity can not hold the line. Resistance is not so strong that it can not be broken with more decent news, so an upside potential of $2.50 is not out of the cards.
Exponential Moving Averages (EMA’s)
The EMA’s remain in a bullish stance with a lot of wiggle room. In fact, there is as much as a dime that sits between the 5 day and 13 day averages! While wiggle room like this is nice it does not come without caution, and this is one of the shortcomings of EMS’s for active traders. The stock could actually begin a bearish trend and the EMA’s would not pick it up for a few days, taking away precious percentage points from an active trader. This is why I am such a stickler on looking at more than one technical indicator.
As you can see, the equity could close down another 8 cents tomorrow and it would still be exhibiting all bullish signs from an EMA standpoint while it would have broken two support levels. However, the combination of technical indicators gives us a picture that is more clear. The goal for tomorrow is to close above $2.35. If the equity can do that it will add support at that level.
Valuation Multiple
As I have stated, when Sirius XM gets above a multiple of 20 it has had a tendency to sell off. It tends to appreciate on a multiple of 15. Sirius XM tested the multiple of 20 (excluding the impact of NOL’s) and sold off. bThe interesting dynamic will be seeing if the NOL issue allows the equity to trade higher with a smaller premium. By example, Sirius XM could trade at $3.00 and have a multiple of 20 if we include the NOL’s.
Right now the equity is at a multiple of 19 and 16 respectively. Watching this segment of the analysis develop will be interesting.
Summary
Upside target in the short term is $2.50. Low end target is $2.26. Look for a narrow range between $2.35 and $2.45 and a wider range of $2.26 and $2.50. These ranges will gain better definition over the next several trading days.
Excellent analysis on the price movement. These articles are very helpful especially on days when news is announced. We are still waiting on the FCC to decide on the control issue.
Why would Malone pump siri at the CC and the annual meeting? He needs another 4% and stock price now means over $700M. My guess he is negotiating another forward purchase at a price lower than yesterday or today. Just like he did the first forward purchase when the stock was at 2.25 or so his forward purchase was aroound 1.87. Any thoughts anyone? Spencer?
“Just like he did the first forward purchase when the stock was at 2.25 or so his forward purchase was aroound 1.87.”
Sounds like you have it backwards… When the first forward purchase was agreed to (in Dec/11), the stock was trading in the $1.80’s and the purchase price was set at $2.15. In other words, they paid a premium when the price was negotiated. It just so happened that the price was higher than $2.15 when the purchase was finalized this summer.
Spencer,
This is the second POWERED BY program launched in the last few weeks.
“The Agenda Powered by Media Matters”
This Powered By phrasing seems alot like sponsoring. If the next one I see is “The Metalica Hour powered by Monster Beverage” on the Octane channel, I will then consider it a small but new revenue generator.
Slip…..
Been on this for a while. Sirius should be sponsoring channels like that…….makes to much sense. It would be easy to get specific channel sponsors for the comedy channels, alot of the women focused channels, and obviously the sports channels could get someone. Why wouldn’t Bud Light want to sponsor one of the sports channels.
Spencer, what happened to Ryan Saghir of Orbitcast? The website is still open but last article was posted on Nov 2010. I used to like reading on that site
I have also noticed something. Siriusbuzz, orbitcast and satwaves, all of the writers got divorced after they started reporting on siriusxm. Do you think there is a spell going on?
Yeh,get rich on Sirius and either give half plus government or you take the money and ruuuun. Also heard alot of Internet people are one in the same not saying spence but just what I’m hearing.
Great tech updates. Just put 100 shrs on FB just for because Netflix guy bought a million shares I’ll be rich in 60 years
What if liberty is buying up all of the avail stock on behalf of Sirius. A share buy back would put liberty over the 50%mark which is why Mel has not done it. What is he and Malone have an agreement that says Malone purchases the necessary shares to put them over the 50% mark and then when that happens those shares are all bought back by Sirius at cost. This would remove a billion shares. The share prices would fly but the cost to Sirius would be fixed and once those shares are bought back liberty gets to its majority position. Win win