Today was a perfect example of why watching technicals closely can be a big help to an active trader. I had identified $3.15 as a key point for this equity and stated that if it can pass $3.15 on high volume and hold it that I would be a buyer. As the equity passed $3.15 I watched more intently. What I saw was that the volume, while above average, was not enough to demand that I take action. Had I traded I would have been a buyer at $3.17 or so and been licking my wounds after the equity retreated.
It is getting interesting, but not yet interesting enough to pull the trigger on the cash I have in the mock account. The positive today was that the equity reached upward above $3.15. That means it will do it again. It even hung around above $3.15 for a spell. Remember, it is always easier to walk a path that has already been cleared. SIRI is setting up for a pop to $3.25 at some point! It is just a matter of when it happens.
Volume was higher than normal, but not enough to really drive the stock. We still want to see this equity above $3.15 on a close with volume of over 85 million shares. If you want to be more conservative wait another day after that for confirmation!
Support and Resistance
Things are essentially the same. $3.15 is the testing ground and we are locked in a narrow range. The nearest downside support is just below at $3.10. I have discussed at length the dynamic at $3.15 on the upside, so let's cover the downside here. If $3.10 breaks the equity will break both a support level and the 5 day EMA. It could easily run to the 13 day EMA at $3.03. Watch closely if $3.10 goes by the boards on heavy volume.
This is why I have kept that cash waiting. I am looking for the right signal.
Exponential Moving Averages - EMA's
The EMA's remain bullish and we almost have the 20 day EMA above $3.00. We really want to see this get above $3.00 because it would help indicate strength above that level. Remember, equities cycle. There will be bearish periods for SIRI at some point. We want any retrace to be as high as possible.
What we want to watch for is this equity staying above $3.10 to keep caution flags at bay.