Sirius XM Stock Is Now Accelerating Towards Higher Prices

XM StockSIRI Stock: Doing It Right

Sirius XM Holdings Inc. (NASDAQ:SIRI) seems to be doing everything right, and these efforts are only now starting to pay off as Sirius XM stock investors are starting to cash in on the fruits of the company’s labor.

On February 2, 2017, Sirius XM reported earnings that beat on both the top and bottom lines, but more impressive was its ability to continuously grow its consumer base by attracting new costumers.

I have been watching this investment for quite some time, and I am not the only one who likes it. Warren Buffett’s Berkshire Hathaway Inc. (NYSE:BRK.B) took a position in Sirius stock late last year. Throwing out a name like Warren Buffett always adds some credence to any bullish view.

Jokes aside, the reason I am so enamored with this company is founded on the method I use to produce my investment views. I have been using technical analysis for nearly two decades to generate my investment strategies. Technical analysis is based on the notion that historical price and volume data can be used to discern trends and forecast future prices.

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The size and scope of the technical patterns and indicators on the Sirius XM stock chart are all the reasons I need to be bullish on SIRI stock.

The following stock chart illustrates the trend that has supported SIRI shares following the financial crisis in 2009, and an indicator that supports the idea of a higher SIRI share price.

sirius1

Chart courtesy of StockCharts.com

A simple uptrend line has defined a clear level of support since the price of Sirius XM bottomed out in February 2009. This uptrend line is simply created by connecting the troughs on the SIRI price chart. This line defines whether SIRI is trading within a bull market.

Trading above it, and Sirius stock is still within the confines of a bull market, with higher prices set to prevail. However, trading below it indicates that the bull market that began in 2009 has concluded, and that a new bear market is in development.

From a trading standpoint, I would be using this trend line to define my risk at any given moment. This can be done easily by placing a stop loss slightly below this trend line, and continuously modifying it as the trend continues to rise.

In October 2016, the moving average convergence/divergence (MACD) indicator in the lower panel 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 momentum.

When a bullish cross occurs, it indicates that bullish momentum is once again dominating any bearish momentum and, as a result, the path of least resistance is toward higher prices.

This tool carries such significance that I bias my trading strategies in the direction that is suggested by this indicator.

The following Sirius XM price chart illustrates a very large technical pattern that carries tremendous bullish implications.

sirius

Chart courtesy of StockCharts.com

Sirius XM stock has been putting in an extremely large “cup and handle” pattern for nearly a decade.

This pattern is created when a price is rejected off of a level of resistance and a sell-off ensues. The next time the price attempts to break above this level of resistance, a smaller sell-off ensues. This price action creates what looks like a cup and handle pattern, so it’s justifiable why the pattern is given that name. The pattern is finally complete when the price is finally able to break above the resistance level that has contained it on the previous two attempts.

The completion of this pattern is constructive on two fronts. Firstly, it provides the next direction in the price, and secondly, this pattern can be used to create a potential price objective. This potential price objective is generated by taking the depth of the cup and projecting it above the horizontal level of resistance that confined the price. This method creates a potential price objective of $8.00.

In July 2016, Sirius broke above this level of resistance, and the bullish implications of this pattern are now in play.

The following stock chart illustrates the price action that continues to suggest that a higher SIRI stock price is likely.

sirius2

Chart courtesy of StockCharts.com

The price action that is contained on the SIRI stock chart illustrates bullish constructive price action.

Bullish constructive price action consists of impulse waves that advance the price and consolidation waves that unwind overbought conditions and set up the next impulse wave. This alternating wave structure of impulse waves and consolidation waves is instrumental in creating a trend that is sustainable.

This wave structure that defines a sustainable trend has been within the confines of an ascending channel. This pattern consists of two upward-sloping trend lines, where one trend line represents resistance and the other trend line represents support. Sirius stock has been oscillating within this pattern as prices continue to rise.

As long as the bullish constructive price action continues and SIRI shares stay within the confines of this channel, the odds of attaining the $8.00 price objective increases.

Bottom Line on Sirius XM Stock

The price action on the Sirius XM stock chart continues to support the notion that higher SIRI stock prices are set to prevail. As a result, I am bullish on this investment and, as long as these indicators continue to support this bullish premise, my views will match.