Are SIRI and XMSR worth the risk?
Sirius Satellite
(
SIRI |
Quote |
Chart |
News |
PowerRating) is currently being plagued with insider trading allegations and a
bit of the old “buy on the rumor, sell on the news” syndrome with Howard Stern.
Sometimes for investors, having a big news item like “Howard Stern is Coming” is
a lot more appealing than “Howard Stern is here…(now what? we paid how much?,
etc).”
Those two items have certainly had a negative
effect on the stock of late, but from a technical point of view, the outlook
from this point is certainly favorable from a risk/reward standpoint:
On the 9-month chart, you’ll notice that SIRI is
nearing its long term uptrend line here and showing some oversold signals with
the 14 day RSI near historical lows where the stock price has bounced in the
past. Look for opportunities to buy SIRI or enter bullish options spread
positions with the mentality that if the uptrend line is broken on heavy volume,
you’ll exit quickly with only minor pain. A short-term target of 7.00-7.25
should be adequate.
XM Satellite Radio
(
XMSR |
Quote |
Chart |
News |
PowerRating) is in a little bit of a different situation technically:
Notice how XMSR has moved into a well-defined
trading range over the last two months between 27.90 and 31.10. XMSR is
currently nearing the bottom of this consolidation range, and could be in a very
nice position to enter a bullish vertical credit spread or other bullish
net-credit options trade. This allows you to profit from time-decay of the
options premiums should the support level hold here, but exit with a very small
loss (or even a gain) should the support level fail later this week.
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Andy Swan
Andy Swan created and
co-founded DaytradeTeam five years ago on a principle of empowering individual
stock and options traders with the techniques and analysis methods typically
reserved for elite professionals. His expertise in technical analysis and
commitment to educating members earned DaytradeTeam a top-ranking among advisory
services for several years.