Investors in Sirius XM Satellite Radio (NASDAQ:SIRI) have had no choice but to keep a watchful eye on Liberty Media (NASDAQ:LMCA) as well. If you are considering an investment in the satellite radio sector or wondering what to do with your current investment you are faced with an interesting dilemma. Which investment is better? Is it Liberty Media, the company that has expressed desire to control Sirius XM, or is it Sirius XM with hope that the Liberty moves will create a premium. It was not long ago that I sold half of my Sirius XM stake and put that money into Liberty Media.
The debate on this has gone back and forth with a whole menu of opinions and options. One thing that I have not really seen is a look at this important question from a pure technical standpoint. While there is also a huge menu on opinions of technical analysis, the fact of the matter is that it is a part of the market utilized by many traders, and therefore must get consideration.
As most readers know there are many differing types of technical indicators to choose from. Many investors have their favorites and rely on those while keeping an eye on other indicators as well. Personally I like to keep things relatively simple. I like to watch volume, support and resistance, and Exponential Moving Averages (EMA's).
On July 2nd I wrote up a technical report on Sirius XM, Sirius XM Testing $2 - Where Will It Go From Here. In that piece I outlined the latest bold move by the satellite radio provider that happened on higher than average volume. I also noted that the next resistance point upward is relatively weak, and that the company now has a strong support level at $1.90.
Looking at Liberty Media, my favorite indicators are actually more bullish than with Sirius XM. Liberty is trading on good volume, and has very little resistance to the upside. A substantial upward move in Liberty is a distinct possibility. Consider these key support and resistance levels:
- $90.90 - very weak resistance
- $90.50 - very weak resistance
- $90.25 - very weak resistance
- $89.55 - very weak support
- $88.55 - moderately weak support
- $88.00 - very weak support
- $87.25 - moderately weak support
- $86.65 - moderately weak support
- $85.40 - very strong support
As you can see, there is very little that is holding Liberty Media back. It is moving into "uncharted waters" and the upside seems to have smooth sailing. Very strong support at $85.40 provides a strong foundation that would represent downside risk of just 5%. All is looking rosy so far.
The Exponential Moving Averages for Liberty look quite positive as well! Liberty Media is exhibiting bullish behavior and even as I write this the equity has moved above all indicators from last evening. I look for Liberty to continue the upward trend.
From a pure technical standpoint the current advantages are with Liberty Media over Sirius XM. That dynamic can shift quickly, but taking all other matters out of the equation, the smart play is Liberty at this point. Remember though, there is some news pending on the Liberty request from the FCC for De Facto control of Sirius XM. That could throw a wrench into these equities in the near term. Happy investing.