Sirius Charts: Stay Patient
Next >
Sirius XM
(SIRI) - Get Report
reported earnings Thursday and got a nice pop to the upside that has faded as the day has worn on. Is it a buy here or a sell? Here's a quick look at the charts.
The monthly chart gives great context. The last swing high was broken on volume and that's a good sign if you want to be long. That high, since it was on volume, will get tested. The real question is whether it will be tested now or sometime later.
Next >
Flipping to a weekly chart, we can get a sense of what parameters you have to work with for a trade.
The target price is 78 cents or higher ($1.50 becomes the next target if it does break higher). For a swing trade (a few days to a few weeks), with the current price around 64 cents, your risk is back to 45 cents, thus your risk-to-reward is around 1 unit of risk for each .74 units of reward. That's not a good risk-to-reward ratio!
Short percentage currently stands at just over 2% of the float so the best trade is one where you wait to see how and if it attacks that target high. If it trades over it, then closes underneath it on less volume on a weekly basis -- then that's the trade. You short it with a stop just over the traded high with a target back down to 44 cents or lower.
Next >
The other possibility is that it breaks over the target high and volume swells. In that case, you jump on board with a stop under the highs.
If it instead, just drops in price from here, 47 cents will be tested before the highs and if that comes in on less volume, then the buy setup becomes a possibility.
At the current price point, there simply isn't sufficient reward for the risk you have to take (from a swing trading point of view).
At this time, the best trade is one of patience, where you wait for a trade setup to materialize where the odds are in your favor. After all, that's what you are after -- the trade where you stand to gain more than you lose and where the possibility of that trade succeeding is greater than the possibility of failure. For now requires you to watch and wait.
So, until next time, keep trading the charts!
L.A. Little is an author, professional trader and money manager who writes daily on
, a free educational site for traders and investors. He has been featured in Stocks & Commodities magazine and is the author of
.









