The week of July 4th is supposed to be relaxing, with the activity being on the beach, out in the back yard, or at the picnic table. For Sirius XM (SIRI) it has been anything but. A 10.9% gain from $1.84 to $2.04 in a two-day period is certainly not indicative of a stock on vacation, and investors are still waiting for answers as to "why?"
My concerns from Monday after the 7% gain abated enough early on Tuesday when activity was fierce at open, blowing through the $2 per share level and rocketing up to $2.07 in short order. By the time I made my decision to buy, and clicked confirmation, my purchase went through at $2.02. The share price had taken off within minutes.
Such seems to be the way with Sirius XM. It either drags within a few cent range, or it takes off like a bottle rocket (or fizzles out and sinks like a dud) at a moment's notice.
I continue to attribute this recent rise to what I expect are purchases by Liberty Media (LMCA). I remain of the strong opinion that what I assume is the second forward contract is now completed, and the recent activity can be attributed to Liberty picking up additional shares on the open market in similar fashion to its purchases directly after its first forward contract.
This still begs the question of what happens after Liberty has its fill? It's a question which is impossible to answer with certainty, but if Liberty is the buyer here, who comes in and picks up the slack once Liberty is full? Will auto sales have blowout numbers this month? I'll be keeping an eye out for Spencer Osborne's monthly article covering auto sales here on Seeking Alpha soon.
While two days of impressive gains have been signed, sealed, and delivered, the question of why has not yet been answered. From a technical standpoint, the recent activity is nothing less than straight bullish. These gains have turned every critical moving average to positive except for the 50 day, and has slowed the 50 day enough to push the impending SMA "death cross" out at least 1 week. Any additional share price appreciation that holds above current levels will stall and ultimately reverse the 50 day moving average, preventing the cross.
The technical indicators look great, but without news, the large question mark of uncertainty begs caution. While I felt comfortable jumping back in Tuesday morning at $2.02, I realize that the share price can drop back again just as quickly as it gained. I believe there is some merit to the notion whispered among investors, that the $2.15 strike price of Liberty's first forward contract set to expire on Friday July 6th, and settle on Wednesday, July 11th, is a price to watch closely.
If Liberty has been buying, expect a form 4 filing, which can be found here, within the next couple of days.
I'll be taking it easy with family and friends on the 4th as will hundreds of millions of other Americans, and I hope your holiday is as enjoyable as mine. See you Thursday, and if you're a Sirius XM investor, be ready to watch the markets and news closely when you return.
Additional disclosure: I may initiate a long position in LMCA at any time.