By Brandon Matthew
The move began this past June as shares of Sirius XM Radio hit a high of .48, only to pull back abruptly and retreat to a low of .30 a share. With July came two new visits to .48, creating a spread triple top formation; each time only to be driven back again. Today’s trading has confirmed a spread quadruple top formation at .48, and this time, there seems to be very little resistance mounted to drive the stock lower. Despite having touched on the .48 mark 10 separate times during the trading day, the demand was insufficient to burst through the glass ceiling.
The .48 resistance represents a major milestone. Several months ago I had made a call for Sirius XM shares to rise above the 1.00 mark. I based that call on the fact that there is nearly no further resistance above .48 that would hold the price per share below the dollar mark if it were broken. Perhaps I was slightly ahead of the curve, because this spread quadruple top suggests that a breakout is due.
Technical analysis dictates that the more a support or resistance line is tested, the more likely that it will be broken. In this case, Sirius XM shares remain in an uptrend which began in the first quarter of this year. The resistance at .48 was only able to knock shares down to just .47, as shares spent most of the day trading within a one cent range, indicating that resistance is weakening.
The likelihood that Sirius XM shares will breakout here is high. From an economic standpoint, auto sales data is coming in much higher than anticipated, thanks in part to the cash for clunkers program. Fundamentally, the company continues to grow revenues and cut costs which will again be put on display this Thursday when the company holds its second quarter earnings conference call. This event should also entice traders to buy into Sirius XM in hopes for a now rumored earnings surprise. An earnings surprise that potentially holds a first ever operating profit for the company.
Traders should watch carefully for a breakout above .48 which would confirm a spread quadruple top breakout, which could result in substantial returns in the very near future.
Position: Long SIRI
Ok. I’m OFFICIALLY excited. My Spidey senses are DEFINITELY tingling.
HOWEVER…the memory of the nearly 2 year merger delay and the POP we were SUPPOSE to get is still fresh in my mind. We were all shocked and crushed when the exact opposite happened. I KNOW this is totally different. But when you get burned on expectations like that….you learn to save a little doubt just in case.
Ok…having said that, yes…I am excited about this earnings call too. And of the “rumored” surprise. Of course news of a FIRST EVER operating profit would be the ultimate surprise.
But here are some others I’d LOVE to hear:
1) Mel announcing Howard would be available on the iphone app.
2) Mel announcing Sirius Blackberry and other smart phone apps.
3) Mel announcing new features on the iphone app like a Pandora like feature!!!!
4) Mel announcing that Sarah Palin was coming to Sirius XM this fall.
Anyone like to add their own “surprise” wish list?
If Mel could make ANY of those announcements AND the Clash for Clunkers gets the 2 billion extension this week…this could be the FIRST quarter in FOREVER that would feel like a home run.
I mean seriously. Even the quarter AFTER the infamous merger didn’t give us that because of the “ugly” deal.
We are Looooong over due an earnings call that would not only energize the base….but excite other investors as well.
Calm down Bubba. Calm down. Caaaaaaaaalm down.
Ok. I’m calm.
SIRI’s resistance at .48 is likely to be broken on the upside over the near to intermediate term, based on the positive momentum that has been reinforced with Monday’s price action. The technical formation of the last 8 months is a rounding bottom and the sequence of pivots is now ascending. Since mid-April, trading has basically narrowed within a coil (from .60 to .30) and firmly based lateral action has moved progressively higher within this coil. The upper trendline of resistance within this coil was broken on Monday, when trading gapped above .46 at the open. Longer term formations project potential toward 1.00+ over the next six months to one year and the weakening resistance at .48 appears to be only a temporary zone to be broken at this point in time. Once .48 and .50 are broken on the upside, conviction regarding SIRI’s further upside potential should be reinforced.
Thanks Demian,
Very nice article…the breakout comes tomorrow!!!!!!!
Q2: This event should also entice traders to buy into Sirius XM in hopes for a now RUMORED earnings surprise. OK, what gives…who started the rumor? Brandon, ASM, The Street, Relmor, CNBC, Jim Cramer….???? Ha ha…
I’m watching Mad Money right now, and I have to laugh. Cramer is blasting the bears right now for saying the rally is over…when he says they are wrong. He goes on to praise the CLASH for CLUNKERS as BRILLIANT and working beyond belief….and yet…OF COURSE….NO MENTION of Sirius.
How hypocritical of him to blast the bears….and at the same time so obviously NOT be bullish on Sirius or AT LEAST acknowledge that it will be helped by the program.
He says you MUST give the BULL some respect….and yet….he can’t respect Sirius?
Cramer may have been partially right , when he said SIRI would be a $5.00 stock after the merger. It is comming and I think he called it right. No reverse split will be needed .
siri would be a 5.00
You know what amazes me. Look around at ALL the media industries that are losing advertising revenue. Mags and Newspapers are going under. Then look at so called “Free” media that is finding it a challenge to MONETIZE their product.
Now….LOOK at Sirius. Yes, they’ve had it rough. But they are recovering and they unlike all those others HAVE learned to create an EFFECTIVE business model. Just wait until they become cash flow positive.
Larger companies should be AGGRESSIVELY courting Sirius.
Cut thru all the bashing….and they have a compelling model that many could learn from.
As much as I am a true believer in Sirius XM; please, as writers at SatWaves, the word “Rumored” – should never be used. Leave that word for other, less credible websites. I apologize in advance, but that word really bothers me. Sorry.
This is a fact based website…that’s what I like about it. Continued success. Go SIRI
I agree Jay. Perhaps a better word would be to “speculate”. But then we’re talking semantics.
I don’t mind the speculating or “rumors”. It’s the EXPECTATIONS that people have to temper. NOTHING is for certain…even when it looks so. Remember the post merger drop? Ugh. How can we all forget. But leading up to the “approval” there was A LOT of rumors and speculation on WHEN the FCC would come to a decision and WHAT it would be. But in the end, after endless delays….even when the POSITIVE rumor came true(that it was APPROVED)…the OPPOSITE of what everyone EXPECTED to happen….HAPPENED.
I guess what I am saying is that there is nothing wrong with “rumors” or “speculation”. They are fun. They let off some tension. And who knows, they just might come true.
Isn’t .53 a resistance also.
Gentlemen ……. Start your engines!
Ok. I guess I take back my comment last week that I had a gut feeling there’d be no run up leading to the earnings report.
The question now is how much more? And will there be any surprises announced?
Gonna be a fun week for sure.
My feeling to this in the coming month we will see the SIRI stock jump to 1.00 and before the end of this year it will reach nearly 1.80
Sirius XM had made many new development including Satellite services, and many other new services is about to be released.
Fasten your seatbelts and get ready for the rid…
@Big Bob
Hell yeah
Sometimes recessions can be a good thing for the companies that are dynamic enough to survive. SIRI was on the brink, that is for sure. SIRI is facing declining subscriber numbers. This is a fact that many cite as a damning statistics as if it will continue to trend to zero. What they fail to cite is the face that the declining subscriber number is correlated with the economy more than competition. As the recession eases, so do the subscriber numbers. Even more important is the fact that SIRI continues to right the ship despite the recession and declining subscriber numbers. This is evidenced by the improving bottom line. Jim Cramer’s minions can cite statistics like churn as a damning predictor of the company’s future; however, those statistics are cyclical and will improve with the economy. And SIRI will emerge with a leaner and meaner business model, subscribers will come back, the auto industry will rebound (after all, people still need cars). Sometimes recessions can be a good thing for the companies that survive. SIRI, a historical “growth” company, has now been forced to concentrate on streamlining its business model to “make the most of what ya got.” While the recession pushed SIRI to the brink, lost it subscribers and cost it dearly in high refinancing costs, it has still survived (not to mention SIRI is entertaining other growth avenues with its new satellites and affiliated companies). While short term technical indicators may show where SIRI is going tomorrow, if you step back and look at the big picture, it is clear that SIRI will continue to improve its bottom line which will result in increased stock prices.
@bubba-ho-tep
bubba, i wish that you or someone would call cramer and ask him about siri. if he says BUY all his clan and worshippers will start buying siri even people who never heard of it. then watch the price go up
Dizzle is right. The fact that Sirius had ONE….just ONE quarter with declining subs…which by the way happened during the quarter where the economy and market was at it’s WORST….AND where Sirius was on the brink of BK because of the refinancing deal SAYS it ALL.
People were NOT spending money….and many were also scared away from Sirius because they didn’t know if it would survive.
The FACT that these boneheads who are bashing the company because of the sub numbers from Q1 WITHOUT taking the above into account PROVES their bias and that they were part of the “SHORT MACHINE”.
They had an agenda and their actions speak volumes.
The truth is that the economy plus that scary/uncertain quarter had an effect….one that Mel said would trickle into the 2Q as well.
So I am SURE the bashers will POUNCE on that as their “proof”…..but I am equally sure that other factors will Prove that Sirius is improving in all other ways…and that the sub loss is not going to be an issue long term. Of course the bashers will try to “spin” this into a negative….but what if Mel has a surprise or two up his sleeve? Something that the bashers won’t be able to spin into a negative?
Either way….I think the shorts are running out of things to hang their hat on. First they lost the merger not happening excuse, then they lost the Sirius won’t be able to refinance excuse, and the BK excuse, and after that the R/S excuse….and soon it will be the declining sub excuse.
I sense they are getting desperate.
Brandon Matthew,
You need to get a real job as your forcasting is harmful to the public and proves you don’t know anything about finance.do me a favor, my condo needs a security guard, I can put in a good word for you. it pays $7.25 per hour,how about it?
Is this true?
http://www.ceoreportcards.com/2009/08/04/goldman-sir/
Pups – it is very true. Goldman reported that it purchased over 9 million shares of SIRI in its 13F holdings report. Some may try and say that this 9 million shares is the reason that the stock is going up, but that is highly doubtful with an 80M share day. From a contrarian perspective, I would say that the reason Goldman bought 9 million shares was because the stock is going up (or they were covering short positions).
@Dizzle – Thanks