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Can the Bullish Trends Continue? Sirius XM and Kodiak Oil Technical Analysis

|Includes: KOG, Sirius XM Holdings Inc. (SIRI)

Lately, we have seen bullish moves in two core portfolio positions.  I continue to receive questions asking how long these moves will be sustainable.  We already know the stories for both of these stocks and we know long-term, they are favorable risk/reward plays.  However, this does not help us understand if these stocks will lag in the meantime.  For the short-term, we will have to look at the charts to gain additional insight.  Through these charts, we can hopefully determine how feasible it is that these bullish trends continue.  Tonight, I am going to update readers on two of my favorite stocks, Sirius XM (NASDAQ:SIRI) and Kodiak Oil & Gas (NYSE:KOG).

First on the list tonight is SIRI.  Last week we were able to accumulate more shares in SIRI around $.82 and today we saw a brief move over $1 for the second time this year.  That is a solid 22% move from last week and I believe we could see further upside from here before reaching a tougher resistance level.  Concerns over delisting and Liberty Media (LMDIA) converting preferred shares to common are lessening so we are seeing a bullish mentality in SIRI take hold once again.  To determine what is next, we will look to the chart for potential guidance.

Per the chart below, we can see SIRI settled above the top Bollinger Band today.  This is a sign we are currently in overbought territory but it does not necessarily mean we will dip from here.  Since the PPS is not considerably above the top BB, we could just accumulate sideways and let the BB adjust itself north with only small dips.  The OBV confirms the breakout move is legit with the sharp trend north.  With the CMF improving and the MACD trending north, we see reason to believe this momentum is sustainable for a move above $1.  However, with the RSI near overbought territory (anything above 70 is considered overbought), we could see a small accumulation period before making that next leg up.  I’m looking for a move into the low $1’s before meeting previous resistance levels which could pose a tough challenge of breaking.


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Next on the list is a stock which has trended north for over a month now.  KOG continues to impress since I first started accumulating near $2.90.  After quickly adding $.93 (32%) over the past few weeks, we closed today at $3.83.  It seems we could take a short breather here before continuing on our path north.  Even with crude prices under pressure as recent inventories were higher than expected, KOG remains nearly unaffected.  With such large growth rates this year, I can see why prices are holding strong at current levels.   As long as oil stays above $80-82 a barrel, I consider that very favorable pricing for KOG and could put us in a position to beat 2nd quarter estimates.  It is far too early to get ahead of ourselves though.

Outside of crude oil prices, my only other concern is if KOG finds it hard to acquire the line of credit they seek.  Not having a line of credit is similar to not having health insurance when you tend to get sick often.   Equipment failures can and will happen in this industry so if a costly breakdown happens soon, KOG could be forced to dilute shares.  We are expecting the LOC to be locked up this quarter so pay close attention to how this unfolds.   Our biggest liability for future PPS growth this year could be tied into how this situation plays out this quarter.

Per the chart below, we can see the strong trend north with the two white lines showing the PPS range.  I find this to be a helpful guideline for when to add to my position or to determine when a trend might be changing.  Accumulation is strong but the CFM is starting to weaken which should not be overlooked.  The MACD is still trending positive which is a good sign but the RSI is in overbought territory.  With that being said, I expect us to accumulate sideways for a bit before the next leg up, much like SIRI.  Keep an eye on crude oil prices though as they could override the bullish trend in KOG.


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Friday should be a good indicator of how these moves will hold up so pay attention to further chart developments.  Make sure you do your own homework to see if you agree as chart reading is an art, not a science.  Good luck out there.

Mike





Disclosure: Long SIRI and KOG but positions can change at any time