What About That Gap At $2.58?
There is a long standing mantra that all gaps in stock prices will eventually fill. While it is not totally true, it does seem to happen a lot. SiriusXM (NASDAQ:SIRI) has had a nice run up. It moved to new highs in relatively short order, and seems poised to continue that run. However, it is also natural for an equity to take a breather as well. I have been writing daily technical updates for premium members and had identified $2.75 as a near term target. A couple of days ago SiriusXM hit that number in pre-market. Hopefully all readers saw that coming and were able to capitalize on the move.
Last night I wrote about the action yesterday and the fact that volume was substantially lower. It would appear that SiriusXM crested at $2.75 and perhaps some consolidation was in order. There is some support at $2.66 and stronger support at $2.60. There is also a gap at $2.58. The natural question is whether SiriusXM will test $2.60 and/or fill that gap at $2.58. It is not an easy one to answer.
Right now it would appear that SiriusXM wants to consolidate a bit and that would suggest it could move down to those levels in the short term. Contrasting that is the fact that we know some positive news is in the pipeline. We have Karmazin speaking at the Liberty Investor Conference next week, the quarterly report in three weeks , and the company could still pop out subscriber news at any time.
Essentially I think that in a news vacuum the company would want to pull back slightly and test things, but that it is all a primer for another run up. If you are going to try to play a swing you will likely need to be pretty savvy and pay attention. In essence, news will carry a big impact on this equity in the coming days. Thus it is probably more important to gauge the news rather than the price. This may sound odd, but it appears to be the reality right now. Thankfully, we here at SiriusBuzz get all of the news and events out to readers quickly.
I am bullish on the equity and see a possible pullback as healthy. My mid-term target is now at $2.80 with a possible bump to $3.00 on positive news-flow. Stay tuned!
Sirius stock price, since March 2009, after hitting a new high, has always tested the 50 DMA before moving higher. Sometimes that test is successful and sometimes its not, but it has always gone back to the 50 DMA, even it it takes a few days or weeks.
Now the 50 DMA moving higher pretty quickly, so its possible, depending how long it takes, that the 50 DMA could be above $2.50 before the test comes, and maybe $2.58 is it. However, with the 50 DMA so high, relative to the recent high, it should not come as a surprise if the test failed this time, which could lead to further downside.
No doubt there are some high expectations coming next week with Mel’s appearance at the Liberty Media conference and its a little hard to understand how he can avoid providing 3rd Q sub numbers before or at that event, so that may be a boost, but he really needs to raise guidance and if he doesn’t raise it above consensus, that may be a disappointment.
So if the numbers are only consistent with expectations, and there is no other news of his contract renewal, or relations with Liberty, don’t be surprised if there is a “sell the news” afterwards. That may very well be the catalyst for the test of the 50 DMA.