Sirius XM Stock Is Technically in No Man's Land

Sirius XM (SIRI) Radio closed at 36 cents on Friday, and from a technical trading standpoint, it sits right in the middle of “no-man’s-land.” With the stock dipping into the 30s and the next support at 29 cents, technical traders are in the middle of a quandary, and the direction of the stock will determine how those traders react.

At this point the technical signs are a mixed bag. There are bullish signs, as well as bearish signs, and this is exactly the point in time where many technical traders employ a “WAIT” strategy. Options week always brings interesting behaviors in any stock, and this last week was no exception.

Current support levels are 29 cents and 23 cents. Resistance currently sits at about 39 cents and 54 cents. In the short term, most technical indicators are bearish, while longer term strategies are more bullish. Ironically, this sentiment is how many traders across the board feel about the prospects of Sirius XM Radio. Short term challenges, and sunnier days long term.

Sirius XM Radio is getting ready to hold its annual meeting. Typically prior to such meetings, trading activity and speculation drive the stock price up. This meeting differs slightly however, in that the company just recently reported its Q1 results, and offered up insight on the direction of the company at that time. While we may see additional insight, I do not expect anything real new to be announced in terms of guidance, etc.

The next big factor for Sirius XM is not technical in nature, but instead news. The company will be launching its iPhone application in this quarter. I anticipate that this news will be announced on or around June 8th. News such as this does not wipe out the technical side of the equation, but it does bring in a rush of trading.

I have in the past stated that the range between 40 cents and 60 cents is an area where the company will not spend much time. The volume of trades between those ranges was light, and it is a point where the “real” direction of the stock will be determined. In my opinion, to get above this no-man’s-land, Sirius XM needs to show execution on various fronts as well as see the benefit of a turn around in the sentiment of the economy.

The next couple of weeks will be interesting to say the least. There are short term hurdles for the company which are offset by longer term cost savings and improved metrics. The current tug-of-war will keep active traders busy. What’s the best strategy? Talk to a financial advisor.

Position: Long Sirius XM Radio

Comments

[relmar2003:]

Tyler, why no mention of the massive support at .32 to .30 range? The support you mention is much much much much weaker. Didnt trade in the .20s on the way up at all, and on the way down was extremely minimal. 200 DMA, 50DMA, and 30DMA, and 13 DMA are all much higher than .29. Lower bollinger band is above .29 and .32 is a major trendline, as well as a fib. retrace level. A ton of buying also occured between .30 and .32. SO if you want to talk TA, Im curious to how you derived .29 and .23 as significant support of mention, vs. .35, .32-.30 range.
I think no mans land is actually .17 to .29 range.

May 18 09:31 AM

[relmar2003:]

So, you think a bearish medium term view opens up sub .23 cents then. Wow…. With no news.. Interesting… Over .40 is bullish and everything in between is no mans land. No. Thats where 99 percent of the buying is. Between .30 and .40 cents. So your wrong, period. You are talking about absolutes now. We are absolutely NOT in no mans land. Your article title is wrong. Period. No debate.

May 18 09:34 AM

[R A F:]

One of the best traders I ever witnessed had the view that nervous shorts were like frogs sitting in a frying pan with the heat gradually being turned up. First they loosen their neckties, start to squirm a little, and gradually begin to sweat more and more. As the heat continues to gradually build (in markets, with support showing more conviction on each minor pullback and subsequent recoveries gradually moving to higher levels) there becomes a point where all of the nervous frogs finally get the message and explode out of the pan. Let's continue to watch the SIRI frogs over the next few weeks and months to see if they follow the script.

May 18 10:39 AM

[dayworker:]

It's possible the iphone app could be a real boost. Just use the app.,
plug in your ear phones and tune on Sirius. This could get mobile
users to play Sirius anywhere anytime. It could make it really portable and usuable in a main stream way. If the ads really tell this to new subs we could get a big rush of new subs and if the bosses get the programing together for a new generation and get out the old gray haired jerks with their stuffy old program ideas.

May 18 12:27 PM

[Sherwyn:]

relmar,

As always, I love the intelligence of your posts. But, I am somewhat of a novice trader and I wonder if you can translate into lay terms what you said in the first post.

May 18 12:48 PM

[Tyler Savery:]

relmar....

As I explained in the comments on my site, the "no-mans-land" referred to in this article is where there are technical indicators that could go either way. Right now we have both bullish and bearish indicators.

Yes, the support at 29 and 23 is weak. The resistance at 40 is also week. The 30's represent the tug-of-war happening with this equity. If the equity breaks under 30 cents, there is little to stop a slide down even further. If the equity breaks 40 cents, there is little to stop a run upwards.

There was light volume through the 20's, and light volume through the 40's.

Here in the 30's, with conflicting technical signs this equity is in what I term as a no-mans-land. Short term, EMA's, MCAD's, and stochastics are bearish. Fibs and lows are bullish, while other technical indicators are neutral.

I agree that all of the trading has been happening in the 30's, but it has been a battlefront where no clear winning trades are defined unless you are looking to trade on the 2 or 3 cent moves.

All an opinion, and that is what is great about technical trading styles. There are various opinions.

May 18 10:24 PM