Sirius XM Holdings Inc.: 92% Upside in SIRI Stock?
SIRI Stock: Bigger is Better
There is little that gets me more excited than a large bullish setup pattern on a price chart. Sometime these patterns make me feel like a kid in a candy store, and I simply cant get enough. These type of patterns have a tendency to bring out the greed in me. This is due to the fact that larger patterns over long time frames outperform their smaller counterparts by a large margin.
Sirius XM Holdings Inc. (NASDAQ:SIRI) stock has set up a large bullish pattern that spans a decade, and the prospects of this pattern have me salivating at the possibilities.
Stock charts are not the be-all and end-all of stock analysis but they have provided the edge that I seek when I invest, and I have had some great successes doing so. The key to my success is that charts have allowed my strategies to remain systematic and completely attributable to price. This does wonders when someone is looking for absolute levels of risk. When I apply this to SIRI stock, I have all the requirements I need to set an appropriate investment strategy.
The following Sirius XM stock chart illustrates the predominant trend, and the level that would define my risk.
Chart courtesy of StockCharts.com
The Sirius XM stock chart above is highlighted with a blue uptrend line. This line is created by connecting the troughs on the price chart. This line defines the area where support is to be found, as well as defining the current bull market in SIRI stock. If the price of SIRI stock penetrates this trend line and closes below it, I would have reason to believe that the trend that began on 2009 has ended. I would then have all the reason to exit this position.
The trend line acts to define my risk. If the trend is no longer up, then it must be down or sideways. Either way, the bull market that began in 2009 would effectively be terminated until another pattern or trend dictates otherwise.
The horizontal line highlighted in black has acted as a level of resistance for approximately 2.5 years, and was finally taken out when Sirius reported better-than-expected earnings in July. In most cases, this would have been an extremely bullish event, but SIRI stock has failed to follow through on this bullish price break, as this event also marked a high.
The chart above has an embedded pattern within it, and the below Sirius XM stock chart illustrates this large bullish setup pattern.
Chart courtesy of StockCharts.com
The pattern highlighted above is a bullish cup and handle or, as I call them, teacups. I like these patterns because they provide a price objective. Price objectives are important because I use them as a rough guide as to where I would exit an existing position, and this is required for an appropriate trading strategy. The price objective of this pattern is $8.00 and this objective is achieved by extrapolating the depth of the cup above the horizontal level of resistance that confirms the pattern.
Once again, this pattern has failed to follow through, thus I have scaled down the time horizon on the chart to further investigate whether the current breakout was still intact.
The following Sirius XM stock chart illustrates that bullish price action has persisted, despite the lack of follow-through.
Chart courtesy of StockCharts.com
The SIRI stock chart above illustrates the health of the prevailing move in the stock price. A healthy bullish chart is littered with impulse waves (highlighted in green) that are followed by consolidation waves (highlighted in purple) that give way to further impulse waves. Bullish investors would love if such a trend would continue indefinitely and, for some investments, it seems to feel like that.
The current uptrend that is highlighted above contains bullish price action directly above it. SIRI stock is currently within a consolidation wave, and the upper level of resistance needs to be broken for another impulse wave to develop. In order for this chart to remain bullish, the price needs to stay above the uptrend line. A break below it would open up longer-term support, but would also completely negate the bullish breakout that began in July. It is imperative that this line hold for the bulls to remain in control.
The Bottom Line on Sirius Stock
Sirius XM stock broke out in July, and the pattern projects a price objective that would whet the appetite of many. I am bullish on SIRI stock as long as the uptrend line remains intact. This uptrend line needs to hold for the breakout pattern to remain in effect; otherwise a failed pattern might lead to further ominous consequences.
