by Demian Russian
Several technical analysis services, such as AmericanBulls, have been firing off a slew of buy recommendations for shares of Sirius XM Radio (SIRI). What are they seeing? There appears to be several bullish indicators showing on the chart. There was the recent spike off of the 50 DMA (daily moving average) on Monday and a close above the middle Bollinger band Wednesday. Both of these recent occurrences are especially bullish because of the stock’s history of battling resistance at those points, and the subsequent spikes that have ensued when the stock has found support and bounced off of those indicators. This recent action is also coming on the heels of a spike and subsequent retrace after the Golden Cross occurred last month when the 50 DMA crossed the 200 DMA.
Analysis of the recent price action indicates that SIRI has been under heavy accumulation. Institutions that want to take a large position do so over time. It is in their best interest to keep the share price contained until they are done accumulating. Institutions cannot trade in and out of a stock as nimbly as retail investors can without moving the share price. Several technical analysis services, such as Worden’s TeleChart, offer proprietary indicators which expose the institution’s accumulating fingerprints — and these institutional fingerprints appear to be all over shares of SIRI. What appears to be simply sideways or slow price action to many, is viewed much differently by nimble traders who follow these accumulation indicators. What can be frustrating price action for some, can be exciting to the trained trader’s eyes. For example, these same indicators clearly showed that institutions were unloading heavy amounts of financial ETFs even as they were trading slightly up to sideways in the days before the market crashed several months ago. Similarly, stocks under heavy accumulation can appear to be going nowhere until the accumulation containment is over. Analysis of SIRI’s recent price action indicates that now may be a good time to “follow the big money.”
The most bullish chart indication that I see is from a simple trend line — the one drawn at the bottom of SIRI’s multi-month upwards channel. This line clearly shows confirmed support when drawn on either the standard or percentage weighted chart. The line is rooted at the .052 low from last February and extends up to the tests in June and the support it has shown recently. You will notice an intraday spike down through the line during the Russell Rebalancing which I consider an anomaly — even though the lower trend line actually showed support on the percentage weighted chart. Simply stated: SIRI is trading at the bottom of a multi-month upwards channel. If you draw trend lines within this upwards channel, you notice channels within the channel and the price action within these channels. This lower trend line has not only shown confirmed support, it has also been a launching pad.
Position: Long SIRI
Contact the Author: DemianRussian@satwaves.com
Absolutely fantastic article. Thank you Demian
EVEN WITH A FEW SUBS LOSS THE NEXT Q’S RESULT HAVE TO BE OVERALL POSITIVE.. AND THIS CHART IS DEF SHOWING SUPPORT FROM 52WEEK LOW. THANKS DEMIAN FOR ALL YOUR CHARTS. ALL ABOARD!!!
SIRI traded down over the last trading sessions, but not enough to make me stop watching. The volume was weak compared with recent sessions when prices rose, which means traders are not betting on the downside. I think the stock is still in a consolidation range, waiting to make a big move. This stock is going to have a big move and it should be to the upside.
A quick look at the technical chart :
1) SIRI is currently is moving down with low volume
Money Flow-Index still climbing.
2) 20 day moving average crossed the 50 day moving average to the upside.
3) 50 day moving average crossed the 200 day moving average to the upside.
4) Bullish divergence: price is decreasing, whereas MACD lines are going up.
5) RSI still above the neutral 50 level at 51, buyers strength still persists.
6) Stock made consecutive higher lows since June.
7) Major resistance (white line) was crossed to the upside a few days ago.
9) Golden Cross Activated !!!
Resistance stays at $0.484 for the upside move. Continue to watch SIRI because the stock should give us an opportunity for a good trade soon.
HERE IS MY ARTICLE : http://ac-investor.blogspot.com/2009/07/hot-stocks-to-watch-thursday-sirius-xm.html
Demian,
As always – great analysis. Keep up the great work.
@AC Investor Blog
AC
have you updated your analysis to account for activity since July 8th the date of your last blog!
Excellent, well researched article Demian! It’s about time for some upswing on this here to stay stock. Thank you for your tireless efforts & pragmatic approach.