SIRI Stock: Follow Through
I have focused on Sirius XM Holdings Inc. (NASDAQ:SIRI) stock in the past, and when I originally published my report, I was really excited to present my findings.
My excitement was based on the size and scope of the chart pattern that I had found on the SIRI stock chart. Larger patterns that span longer time frames are more significant than their smaller counterparts, so when I found a pattern that spanned a decade, I could barely contain myself. I could only presume the type of fireworks that were yet to come.
Funny how life works, because all my excitement was quickly put to rest as the pattern completed, and nothing really occurred as a result. SIRI stock did not break down either; it just settled into a nice little trading range and very little happened.
Then, to my dismay, the U.S. election results were finally revealed, and the equity markets’ reaction to that news was incredible, and completely the opposite of what most pundits and media outlets had expected. Market indices have surged higher and in the process, SIRI stock has once again begun to move.
The following Sirius XM stock chart illustrates the predominant trend.
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 bull market in SIRI stock. Traders can use this trend line to acquire shares as the trend is tested, or use it to define their risk. Risk is defined simply; if the price of SIRI stock closes below this trend line, it indicates that the uptrend that began in 2009 has ended, and that exiting any long positions would be the prudent action to take.
As long as the price remains above the uptrend line, the bull market in Sirius XM stock is intact and higher prices are expected.
The uptrend is not the only indicator on SIRI stock chart that supports higher prices. The moving average convergence/divergence (MACD) indicator has just crossed in a bullish manner. MACD is a simple and effective trend-following momentum indicator. Signal-line crossings are used to distinguish between bullish and bearish signals. When a bullish cross occurs, it signals that momentum has swung as the bears have lost momentum and the bulls are in control of SIRI stock. Under such conditions, that path of least resistance is higher.
The following Sirius XM stock chart illustrates the pattern that first brought me excitement.
Chart courtesy of StockCharts.com
The formation highlighted in pink is a bullish setup pattern known to traders as a cup-and-handle formation. Traders use this setup pattern to time and strategically implement a trading strategy. This pattern is completed when the price closes above the horizontal resistance level.
The reason why this pattern can be used to implement a trading strategy is that this pattern provides a possible price objective to trade against. The price objective of this pattern is $8.00, and this price is achieved by extrapolating the depth of the cup above the horizontal level of resistance that confirms this pattern.
Sirius XM stock first broke above this horizontal level of resistance that confirmed the bullish pattern in July, after reporting better-than-expected earnings. The problem that quickly surfaced was that SIRI stock failed to follow through after the initial surge in price. Along comes the new President-elect Donald Trump, and the market has become invigorated, and Sirius XM stock has finally overtaken the highs that first alluded to a bullish breakout.
This price action has once again opened the door to higher prices, and perhaps the target price of $8.00 will finally be challenged.
Bottom Line on Sirius XM Stock
SIRI stock is now following through on a previously completed technical pattern that is suggesting that much higher prices are ahead. As long as the signals and price action remains bullish, my bias on Sirius XM stock will match them.