Sirius XM Radio benefiting from automotive recovery

A special report today by CNBC brought Sirius XM Radio stock to the forefront of investors’ minds, but the charts have been telling the story all along.
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Even on Friday the 13th, technical traders firmly believe all fundamentals are reflected in stock prices. So, they focus on the dynamics of prices. That appears to be the case with Sirius XM Radio (Nasdaq: SIRI).

For the record, this stock was considered dead money right after the tech bubble burst. Even the merger of Sirius with XM Radio still failed to generate anything worth noting. Even now, the stock is trading just over 2 bucks.

However, it is trading above its 15 month and 25 month moving average channels. And, on the shorter timeframe, it is trading above its 100-day and 200-day moving averages.

Look again at the monthly chart, though, and you immediately notice a strong angle from the lower left to the upper right from 2009. That spells a bull move is in place from that extreme low, and has been in place, albeit slowly; and ratcheting the pace for the past year.

Now notice the track record is in concert with the recovery in automotive.

On the product side, have you every experienced satellite radio? This reporter has; and I dare say that regular radio doesn’t even come close. In my opinion, regular radio is so far below previous standards that I seldom turn it on; that is, until my wife Judi got Sirius XM in her Chevy Cobalt.

Getting Back to Stock Price

After checking the monthly chart going back to 2000, there was a high of 69.43 right after its IPO. How low has the stock fallen? Try 5 cents in 2009.

So that means the stock is still on its back. However, the leg has been up from that point and has not suffered any major setback.

Should you buy at this point? That’s up to you. I prefer not to buy on news like a CNBC report, but that’s me. However, the stock is cheap when compared to its potential and the growth that is coming from the auto industry.

Normally I like to pick a recent low as support. I also like to use the midpoint of an up month bar for entries at times. My order is in for 2.16 or lower. Again, that's my trading style.

In this case, the bar is so low, you can almost take your pick, if you are so inclined. Then again, it is Friday the 13th!

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Disclosure: Frank Sherosky, creator of the chart and author of "Awaken Your Speculator Mind" does not hold any stock, option or futures position in this equity or futures at this time.

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About the Reporter: After 39 years in the auto industry as a design engineer, Frank Sherosky now trades stocks, futures, and writes articles, books and ebooks via authorfrank.com. He may be contacted here by email: [email protected]

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Additional Reading:
Toyota stock closes up despite lousy Q1 report and no full-year earnings outlook
GM stock closes higher near IPO price after April sales report
Investors yawn at Ford stock even after upbeat April sales report
50 mpg needed as gasoline futures nears old 3.63 high


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