Tune Out Facebook; Tune In Sirius, Pandora

NEW YORK (TheStreet) - With all the excitement surrounding Facebook's Friday IPO, I was not surprised to see the trading volume of SiriusXM (SIRI) drop by almost half from Thursday.

Granted, Thursday was an exceptionally busy for investors, however, with the cliff dive the stock price experienced Thursday, a busier Friday was expected. Thursday marked only the third day this year the price closed below the 200-day moving average, a significantly bearish warning to investors.

I have followed and written about Sirius for a little over a year now. I've seen the most unique aspect of the stock is not the stock itself, but rather the passionate core of retail investors. As a result, I attempt to provide the very best view of the landscape possible.

I'm not surprised the stock is trading lower; my warnings were heeded by as many as possible. The current price-to-earnings is below 20 and if you are long at this point you might as well hang tight from a valuation and technical analysis point of view.

I believe the 200-day moving average, currently at 1.95, will likely get tested several times in the near future. Will Liberty Media (LMCA) buyout the rest of the company? I believe the odds favor a buyout as the net operating losses (loss carryovers for taxes) greatly increase the value of Sirius for a profitable suitor.

A buyout does not mean investors are going to make big bucks however, as was demonstrated earlier when a large block traded hands near $2.12. Some erroneously believed $2.12 or $2.15 became a new price floor, as if to assume the seller acted in haste or out of ignorance. As I replied to a comment, the $2.15 price acts as much as a ceiling as it does a floor.

The good news is that Sirius is relatively "cheap" for the first time in over a year, with a forward earnings multiple of "only" 17. The bad news is the stock is under $5 causing some new possible money to avoid it. A basic rule of Wall Street is any stock under $5 is a bankruptcy candidate and even a large bank like Citibank executed a reverse stock split to increase the per share price.

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