Sirius XM Radio
Sirius XM Radio (SIRI - Get Report) is another name that's been consolidating after a big leg higher. The satellite radio carrier has been bouncing within a rectangle pattern for the last few months, hitting its head on resistance at $3.25 before finding a floor at $3. Now, shares are testing support again.
Consolidations such as the one in SIRI are common after big moves -- they give investors a chance to catch their breath and figure out their next moves. And because rectangles are easily defined on the chart, they're very tradable setups. A breakout above $3.25 resistance is a buy signal, while a break below $3 support signals a sell in SIRI.Momentum adds some extra confidence to this trade. 14-day RSI had been trending lower for the better part of 2013, only to break to the upside in April. Because momentum is a leading indicator of price, the implication is a breakout in SIRI's price action as well. Wait for price to signal a buy before jumping in.
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