Sirius XM Radio closed above $0.60 yesterday on good volume. The equity, which fell to as low as a nickel only a few months ago, seems to have found some legs in recent weeks, and during that time has shifted to bullish indicators across the board.
Technical analysis has many factors. Those that follow these indicators have typically been stymied by mixed signals, some bullish while others are bearish. For the first time in a long time, technical signals have aligned, giving perhaps the strongest indication for an upswing that can maintain itself going forward.
The Expotential Moving Average (EMA) is a moving average analysis that gives more weight to more recent prices. Sirius XM currently enjoys very bullish indicators on EMA's for 5 day, 20 day, as well as the 50 day. Sirius XM is also bullish on Fibs, stochastics, and volume. In addition, Sirius XM closed above the $.057 resistance, which is now support.
One potential issue is that prior to this week, the resistance and support levels between $.0.50 and $0.60 have not been real strong. In my opinion, more volume above $0.60 will add strength to that support level, and it could give legs to a continued upward trend.
The buying trend is not huge, but there does seem to be a consistent "easy" pressure on the buy side of the trades. What is good is Sirius XM is not trading on the emotions of news or lack of news. This upward trend simply seems to be natural. This natural aspect of the latest moves is a positive in my opinion in that the equity is not being influenced by emotions, or a herd mentality.
Of course, the key here is maintaining the current trend. Should SIRI pass through $0.70 per share, investors could begin to gain confidence that the reverse split issue is becoming less of a drag on the company. If Sirius XM passes $1.00, it should begin to see more and stronger institutional play (although some institutions still will not buy). Institutions have been dabbling in the equity, but there are still many that have only $5 to $10 million invested, which by institution measures is not very substantial.
On a day when it appears that the markets are bullish as well, we could well see Sirius XM's price continue to appreciate or build support at levels above $0.60.
Position - Long Sirius XM Radio