After a few days of trading in a tight rage and with low volume, Sirius XM (NASDAQ:SIRI) has made a sudden and bold move to new highs, and is making the move on higher than average volume. There is nothing Sirius XM specific that is driving the move. Rather, it seems to be a situation of some pretty fortuitous timing. Essentially, the Fed is pushing forth an agenda that the street likes. The market has been rising, and it appears that investors are finally stepping up to the plate to participate in the rally rather than be left behind.
The reason the timing for Sirius XM is so good is that the company is in the midst of a $2 billion dollar share buyback program. Activity such as this supports the current stock price, and at certain points helps to drive it as well. Combine this with a solid quarterly performance, good fundamentals, and positive momentum and you have a recipe for moves to happen. That is exactly what we are seeing right now.
This is the beginnings of the rewards long-term holders have been seeking. It is also great action for more active traders. Essentially, the price can appreciate from here, build new support levels, and then settle down a bit. Moves like this give savvy investors some time to play bigger and better runs as well as rest periods to cash out on when the volume and upward swing ease. The trick here is that with Sirius XM in the market buying their own shares, it may be tough to identify those sweet spots. An easier strategy is simply to join the ride and only make moves when a new trend is confirmed by more than one trading session.
From a technical standpoint the only resistance above is not technical at all. It is more psychological. There is strong support developing at $3.35 and up, setting up the possible bottom side of a wider trading range when it develops.
If you are looking for a play, watch the volume. It has been telling the story. Small moves are happening on volume above 45 million shares, while bold moves are needing volume of 65 million. When volume dries up we see volume in the mid 20 million share area. The trend is higher highs and higher lows. That should be able to continue for a while yet. The caution here is that Sirius XM is approaching a valuation peak when measured against current guidance. Going beyond $3.75 will require some assumptions to be made to justify valuation. Pay close attention, because this equity is clearly capable of moves without any real compelling news hitting the wires.
Disclosure: I am long SIRI. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.