Don't Underestimate Sirius' Triangle Pattern

When I first became a stockbroker, I was immediately drawn to the study of supply and demand and how it applies to the stock market. Technical analysis became more than just a hobby to me, it became an obsession. The real payoff came following nothing less than a takedown in semiconductor stocks in 1997 -1998. There were 3 stocks in that group that I made buy recommendations on within the entire sector; PMC Sierra, Vitesse Semiconductor and QLogic. The stocks were trading in the teens at the time and 2 weeks later, the big names on Wall Street began recommending those stocks that my clients were now in. Needless to say, they did well. Several years ago I left that world but continue to use charts when making my own investment decisions.

I recently wrote an article describing a certain bullish triangle pattern that was emerging with Sirius XM (SIRI) stock and even went so far as to offer a price objective of .64. The responses I received to that post were overwhelmingly negative. One Yahoo poster described my analysis as follows:

BM has been mired in an ongoing horrendous slump that show no sign of ending. Guy thought it was easy to predict the sub count and came to 300K and then that flag football 68 cent call being the latest screw ups.

A friend went so far to say that he felt I was "reaching" with that one. That was nearly 25% ago for those keeping score. There were many such replies to my article as well as to a follow up article just days ago, in which I reiterated my belief that a breakout to the upside was imminent . I put my reputation and for that matter my own money on the line every time I publish a conclusion based on my interpretation of supply and demand. Still, I must concede that the .42 that was achieved today is far short of the .64 I had predicted.

Don't worry, however, there may still be time. So much so that yet another big Wall Street name, Jim Cramer's own "TheStreet.com," has just published an article regarding the technical chart that Sirius XM is presenting. The article boasts a target price based on technical analysis of .63. Redemption is a wonderful thing! Not so much of a "reach" now, huh?

Position: Long SIRI

Comments

[Asitoughtobe:]

Definitely in reach!

Apr 17 06:29 AM

[Ishortyou:]

the problem is their business model is going through major changes, the fall out of the car industry its major sell sector went to oblivion with the credit crisis, this on top of the recent debt they made to merge with XM (talk about bad timing) and the debt of maturities coming this year put the company in trouble. Fortunately for now they were able to find someone to bail their tails and refinance their debt. But not so sure their business model is sustainable, they are trying to use mobile services specially the cell phone, and other sources but the open market is kind of taking their market share slowly but surely, same thing happened with GPS devices market. So not so sure Sirius have such a great future.

Apr 17 07:29 AM

[Gino Lattarulo:]

Brandon, penny stock or not, the chart just looked too perfect to ignore didn't it? Nothing like great volume to vindicate your analysis. Well done.

Apr 17 07:40 AM

[wcorowitz:]

iphone, iphone, iphone!!!

Apr 17 08:44 AM

[ralston3057:]

Brandon,

I enjoy reading your articles and opinons. You always support your opinions with data and logic. For that, I thank you. I do read your data as well as others and form my own opinons based on my own research and those of others. Thanks for doing a good job.

Apr 17 09:03 AM

[1more4me:]

Good Call!
Great timing, coincidence, on the pattern, or just shorts covering----in any case- bet you are feelin' a bit high right now. Nice move of .07 or what- 20% before 11:00 this morning. I'm impressed.
And by the way- Thanks for the Past article on Short positions---Yeah, I was exactly backwards in the numbers, directions, whole 9 yards- can't explain it- just pulled a dumb-arz that morning...Must have been before coffee...But you set me straight.... If it breaks .50, I might just become a short myself for a day or two...
Appreicate all your articles.
Thanks,

Apr 17 11:15 AM

[dogtrack2:]

Kudos. It's good to see somebody go against the herd and get vindicated by their convictions.

Apr 17 11:19 AM

[DBLOCK:]

Rub it i their faces. Many of us investors have been kicked and spit on and laughed at for years by the investment community as well as a million others.

Apr 17 11:31 AM

[connorport:]

We are truly sorry for your down side on the short but this is how it goes sometimes. Never heard of you before the stock started moving rapidly upward which tells me you're in steep on some shorts or are trying to short. Hold till it hits .75 and you might make it on a ceiling bounce. Better yet, move back to the banks or GM. With the massive amount of debt to equity swaps about to happen to pay back the TARP money there are plenty of soon to be losers out there. RS is almost guaranteed when you issue Billions of shares. SIRI has already taken its beating and many will most likely sell their bank shares and look for positive avenues to invest and they may find SIRI to be the next big mover. Do what you want, its your loss.


On Apr 17 07:29 AM Ishortyou wrote:

> the problem is their business model is going through major changes,
> the fall out of the car industry its major sell sector went to oblivion
> with the credit crisis, this on top of the recent debt they made
> to merge with XM (talk about bad timing) and the debt of maturities
> coming this year put the company in trouble. Fortunately for now
> they were able to find someone to bail their tails and refinance
> their debt. But not so sure their business model is sustainable,
> they are trying to use mobile services specially the cell phone,
> and other sources but the open market is kind of taking their market
> share slowly but surely, same thing happened with GPS devices market.
> So not so sure Sirius have such a great future.

Apr 17 12:30 PM

[connorport:]

If it hits .50 that will become the new bottom. .75 will be the short term ceiling if no positive news comes about to bump us to $1. This is a volatile fire to predict.


On Apr 17 11:15 AM 1more4me wrote:

> Good Call!
> Great timing, coincidence, on the pattern, or just shorts covering----in
> any case- bet you are feelin' a bit high right now. Nice move of
> .07 or what- 20% before 11:00 this morning. I'm impressed.
> And by the way- Thanks for the Past article on Short positions---Yeah,
> I was exactly backwards in the numbers, directions, whole 9 yards-
> can't explain it- just pulled a dumb-arz that morning...Must have
> been before coffee...But you set me straight.... If it breaks .50,
> I might just become a short myself for a day or two...
> Appreicate all your articles.
> Thanks,

Apr 17 12:34 PM

[matty3000:]

Do you guys think Mel reads these boards?

Apr 17 12:57 PM

[I weep for ...:]

Matty3000:
No.

Apr 17 02:04 PM

[1more4me:]

Connorport,
I agree, didn't pull that short trigger earlier today. It's just so Hard to look at 10 & 20K lots from back at .10, .13, .18 cents. Those pushing 300% sure make you want to bank and reverse for a little play. But then again, its a long long way back to make up for the Lot I STILL HOLD from 6/6/06 @ $6.80..... I expect the QTR news with positive synergies info then some I-phone updates will push it right up close to a buck. Subs probably won't be impressive but man just think if they announced some profitable numbers/beat expectations- Bet the upgrades and anal-ist would come out of the woodwork then!
LONG SIRI----but I'll tradefor a $ in any direction....



On Apr 17 12:34 PM connorport wrote:

> If it hits .50 that will become the new bottom. .75 will be the short
> term ceiling if no positive news comes about to bump us to $1. This
> is a volatile fire to predict.

Apr 17 04:09 PM

[Satwaves:]

You're right. Supply and demand doesn't care if its a penny stock or Berkshire. It has no emotional attachment.
I knew it would happen, but the one thing the charts don't tell us is "when."

It had been about 2 weeks since it formed and 3 weeks is usually a negative sign if a breakout doesn't occur before then. I was getting a bit nervous to tell the truth. The breakout started a couple of days ago but I wanted to make sure it was real.

Seeing you mention it again yesterday combined with the street motivated me to mention it again. Today was vindication for all of us.

On Apr 17 07:40 AM Gino Lattarulo wrote:

> Brandon, penny stock or not, the chart just looked too perfect to
> ignore didn't it? Nothing like great volume to vindicate your analysis.
> Well done.

Apr 17 09:13 PM

[drbob66:]

I hoe you're right. I bought some SIRI at 11 cents.

Apr 18 07:47 AM

[dcb:]

I can't find an index that isn't currently trading in a triangle pattern.

Apr 18 08:41 AM

[dcb:]

It would have helped if you included the chart and pointed out the patterns you see and why you believe that is the target.

Apr 18 08:47 AM

[Satwaves:]

Stock Shock The Movie is now available for preorder. I put a trailer clip my website at satwaves.com.

It stars me of course, and a few others you'll recognize!

Apr 18 03:46 PM