Sirius XM: Get Ready for a $2 Trading Top

NEW YORK ( TheStreet) -- Nothing bothers me more on Wall Street than when someone asks a question they already know the answer to. It is as if asking the question can somehow magically alter the current reality.

Many continue to ask whether or not shares of satellite radio giant Sirius XM ( SIRI) will start to trade higher based on factors like moves being made by Liberty Media ( LMCA). These questions are being raised as the market is providing the answers.

Shares of Sirius continue to drop below the magical $2.00 (reaching the $1.97) level for the first time since surpassing that mark in early January.

While this drop was not a surprise, what caught me off-guard was the reaction of investors questioning their own resolve to hold on to the stock. If one is comfortable with the long-term outlook of the company, current levels should actually present a significant buying opportunity. Instead, many have opted to be fearful.

The fact of the matter is, Sirius has been one of the best short candidates on the market since the stock was in the $2.40s several weeks ago. I made a case for how market dynamics would not allow it to hold those valuations specifically from the standpoint of its P/E. Furthermore, this has not been a stock with a reputation on trading on fundamentals and based on recent factors I am inclined to think that it may start to trade under $2.00 for the next several months.

As dire as the chart may appear, it was also filled with opportunities where investors could have exited with sizable gains. Disappointingly, investors have allowed their emotional attachment to the stock to consume their ability to think rationally. Remarkably, many are now wondering whether or not to exit their positions under $2.00 whereas that option was deemed completely out of the question in the $2.40s -- I don't think that this is something that I will ever understand.

As the chart above shows, Sirius is now under a considerable amount of pressure. However, there are a couple of things to consider as investors mull over their positions.

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