By Brandon Matthews
If my inbox this morning can be used as a barometer of market sentiment, the headline of this article alone should have people scratching their heads in disbelief. Let me explain. I first alerted Satwaves readers about the upcoming Russell rebalancing on June 15. On that date, Sirius XM closed at .33 a share. I was concerned at that point because the re-balancing at that price could have easily taken the stock to the low .20’s.
Sirius XM (SIRI) began to make some moves including the launch of its Apple (AAPL) iPhone app, which in just 12 hours became the most popular music download at Apple’s iTunes store. Upgrades ensued and the company was able to refinance a great deal of its debt at a much lower interest rate. All of this led to a rise in SIRI shares to the mid .40’s..
I was asked yesterday if I would be trading SIRI on the Russell news or if I would stay long. I decided to stay long and stated that the worst I foresee is the stock being taken down to .35. It closed at .36. For a stock that had been living in and around .34 for the better part of four months, that’s a much better scenario than the .22 it could have found itself under the circumstances of just two weeks ago.
In after hours, the stock managed to regain a foothold above .40 again, most likely due to short sellers using the index re-balancing to cover their short positions. Sirius XM investors should be elated and relieved. My mailbox tells me otherwise! In the end, the stock is holding ab0ve key technical support. I can assure you that despite the fall and subsequent rise, no retail trader had any hope of trading that swing. Although some stop losses may have been triggered, the end of day action probably means that few if any of those trades were actually executed.
Looking ahead to Monday, it is likely that the market will continue to function as it has been. The market makers have a lot of shares to sell now that they purchased for .36. I find it highly unlikely that they would sell those shares for less, which bodes well for Sirius XM as we enter a week with quarterly auto sales data on deck. Good news on the automotive front should spur demand, which will begin to lighten the load of shares that the MM’s now find themselves burdened with.
Position: Long
SIRI
How is it that the share price dropped so quickly, passing orders to buy above $0.36? Millions of shares traded at these low levels, while order to buy at $0.40 did not go through. Did someone just unload several huge chunks (around 10 million each) at market and it just matched with the biggest buy orders out there? Or, are there traders for which the rules of “supply and demand” do not apply and they are able to bypass the market and the rest of us?
just seeing if i can sucessfully enter the board.
That’s a good question Chris. I like many people had buy orders placed to pick up more shares on any potential dips. I had an order in to buy good untill 4pm to pick up shares at .39 that never executed. I think this is like Brandon says something that retail investors had no play in.
i filled at 39.50 on its way down. it traded right through your limit.
Brandon….you called it correctly.what price did you pick up more @, pray tell.
off to see the wizard
So what happens to this stock next week? are we going down or does it continue to move upwards?
Lot of positive things seem to be going on for the company.
Brandon/anyone, I am a little confused. Isn’t this huge swing part of some attempt at manipulation. It doesn’t hurt me. I got in for the long term. Will it ever be a normal stock? Is it the fact that they have no earnings and a huge debt? I think both of those are going in the right direction. But aren’t a lot of small players getting shafted by these huge swings? I am encouraged since it has moved up a little from that 5 cent low.
Call me crazy but, I’m absolutely delighted at the performance of stock…..
Within a couple of days…things should go back to “normal” with SIRI stock…
My buy limit at .41 executed at .4005 – 100k shares.
what broker site do most people trade on with sirius?
“In after hours, the stock managed to regain a foothold above .40 again, most likely due to short sellers using the index re-balancing to cover their short positions. Sirius XM investors should be elated and relieved.” Al Capone has nothing on Wall Street!!!
Everybody is talking about the stock closing and what it did after hours, but the drop from .44 to .36 and back to .44 happenned in a 30 second period. It just happenned to be the last trade registered at .36 – could just have been .42 or .44. It happenned in a flash.
Could that actually have been a prenegotiated trade at an average price for the week before?
Brandon, thanks for clearing up the rebalancing. I thought most of that had already been done. I agree, I think it bodes well for a move upward. The Toyota, Volkswagen and Iphone are real positives for most of us. If the economy and the balance sheet keep improving can the SP stay under a buck. Looking back, especially if you go with most of the media slants, how could this company come this far, this fast(post merger).
Another subject, another view: I have both services for about 10 different reasons. No changes that I can forsee will make me consider dropping them.
@sxminvestor
SXMINVEST: This is how the MM make their money. These are timed trades at the very last second of trading. Look at Brandon’s article from June 22nd (Sirius XM in Cincinnati). Watch the video segments. It’s price fixing!!!!
I was just making the point that the real close was more like about .44, then ISEG traded with itself for 2 hours trying to pull it down after hours. Our portfolios show .36 close, but I don’t believe that is accurate.