While the trading day is not over, things appear to be looking better from a technical standpoint. Sirius XM has been flirting with a key resistance point for days now, while other indicators such as the Exponential Moving Averages and convergence are turning more bullish slowly but surely. During the past several days we have been reporting that the equity is in a key point for a reversal toward a bullish run.
The company has spent most of the day just above the key trading point of $1.01. If the stock can close at $1.03 or $1.04, it would be a bullish sign. If it can do it on heavy volume, it will be even more bullish. The chart below shows the volume activity. Volume is still below normal, but a huge spike will happen as the Russel Index Reconstitution happens. What I have been seeing and anticipating is that Sirius XM will walk upward and as the convergence of moving averages happens, will begin to see increased volume to support the next move. Right now, $1.01 is still a wall, and a wall that is getting stronger by the day. It represents resistance at the moment, but will switch to support when Sirius XM gets beyond it. The $1.01 price point is also where convergence is happening. You can also see the latest two runs up in the chart. Those runs happened with convergence of EMA's. As stated, we are at EMA convergence now.
The cautions that investors need to consider include items such as options expiration this Friday. Will that event, which typically causes frustration for investors be offset by the news from Russell on the second phase of their additions and deletions from the Russell Indexes? that remains to be seen. The real Russell action happens next week, and the reconstitution happens on June 25th. Russell has included Sirius XM on their list of preliminary additions for the Russell 3000 and Russell Global Indexes. On June 18th Russell will update that list. Sirius XM will in all likelihood remain on the list. Readers can refer to our article on Russell Index Clarity for additional detail.
The additional caution is that Sirius XM has yet to confirm a bullish run from a technical standpoint, and until that happens investors always need to bear that in mind. While I am leaning to a positive upswing based on indicators, the Russell, and a few other things, this is the stock market, and anything can happen. So far the action today is happening on light volume, which in my mind means that some caution still needs to be applied to signals that are showing bullish signs.
Position - Long Sirius XM Radio