Taking Risk Siriusly

Buy SIRI,
either today or on Monday. The company reports earnings on August 1st, and this is one of the only times a chartist will say buy before an earnings report. Sound risky? Not as much as you might think and here's why,

2 year Weekly Chart for SIRI:

• First, we have a negative MACD correlation, the stock should actually be trading around 4.5, which is above the daily 50DMA

• Second, there is a very strong 200DMA support which is doubled up by a support line from October of 04' when the stock saw resistance at 4.0

Aside from charts, the important thing here is that XM Satellite Radio, Sirius's competitor just released earnings two days ago. How did they do? Horrible. They missed estimates by 17 cents and guided downward. How did the stock react? Up 20% in two days.

Both stocks are down about 50% this year, and my bet is that all the smart big money investors had already priced the bad news into the stock. They knew XM would miss, and they know that SIRI will miss also. All of the sellers for these stocks are gone. I don't think that the same investors who rewarded XMSR for bad earnings will change their minds for SIRI. Also the trading programs these guys use will have buys in at the 200DMA, not allowing the stock to cross it.

XM & SIRI have a history of downward pressure until late summer only to increase in price and peak early in December.

Don't miss out on this easy trade.

Confidence Rating: 4/5 Stars
(Full disclosure: I bought shares of SIRI on 07/08/06)