Sirius Chart Shows Impact of Pandora IPO

NEW YORK (TheStreet) -- There's a lot of buzz surrounding the Pandora (P) public offering today. Shares were well received with the offering price being bumped higher in recent days. A stock that has suffered in the run up to this offering is Sirius XM Radio (SIRI), whose paid subscription revenue model potentially finds some increased competition from this upstart.

>> Pandora IPO Pressures Sirius XM Shares

Many newer model cars have sound systems that integrate with various handhelds. The thinking is that there will be an increase in choices when it comes to where you get your music.

Although the fundamental side of the equation is interesting, what's more interesting to me is the charts I see on Sirius and the potential for a larger retrace in the stock price. Let me share those charts with you.

On the intermediate-term time frame, Sirius currently has worked higher on a suspect bullish trend. Those trends typically retest the area where the initial break higher occurred and with this chart, one could argue that this has already occurred.

What I mean by this is that from December of 2010 through March of 2011, Sirius stock vacillated around the top of the retest and regenerate zone. Whether the test has already occurred or not isn't clear-cut and sometimes, that is the case when reading a chart. Thus, you have to assume that this area is the target if the current key test area eventually fails.

That current test is the high volume, wide price spread bar from the first week of May. That bar was tested this week for the first time and looks to hold for now which tells me that short term, you have to think a bounce is in order. Looking at the daily chart, the bounce will find resistance at the anchored zones as indicated on the chart.

More than likely, the $2.10 area will cap the bounce and Sirius will trade between that price point and the lows registered this week until a break one way or the other occurs. The selling pressure the past three weeks may have just been pressure exerted as a result of the general market or it may have been the IPO of Pandora and the fear of increased competition.

The past three weeks of price pressure will likely give way to a bounce, but this is not the place to chase prices higher again. A retest and regenerate back at the $1.40 to $1.50 area is still not out of the question.

Until next time, just keep trading the charts!

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L.A. Little, author, professional trader and money manager, writes daily on his own educational Web site for traders and investors. He has been featured in numerous publications and is the author of Trade Like the Little Guy. His new book, Trend Qualification and Trading, details the principles and techniques he writes about on TheStreet. Little�s background includes degrees in philosophy, computer science, computer information systems and telecommunications. With a trading philosophy centered on capital protection first and the accumulation of consistent gains over time, Little espouses a simple technical approach to trading the markets that is a throwback to the days of past. With a focus on swing points and trend qualification, he provides a breath of fresh air to an otherwise crowded room of derivative indicators with an emphasis on technical minutiae.

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