Well, the archived article for Sirius XM Holdings (SIRI) that I’d like to reference now is not available. It was the one where I issued some crazy $10 or $12 price target for SIRI in the next couple of years because I wanted to be the first to do it.

Some of you may recall the article – you probably dismissed it as some crazy price projection like I did at first….but if SIRI is breaking out of a long consolidation like I think it might be, those price targets may be more of a possibility than we imagined at that time.

The recent chart activity for SIRI has been very encouraging to say the least. When have you seen SIRI develop 2 tall white candlesticks on its weekly chart like it just did these past 2 weeks? It’s been quite a while. Can SIRI once again turn into another cash cow like it was for a couple of years? Let’s see if this is a SIRI breakout or fake-out.

SIRI Breakout or Fake-Out

I will look at a number of charts to try to determine the validity of the recent price action. Sometimes a real breakout isn’t realized until a significant portion of the move has been made. SIRI has been on a tear the last week and a half. It sure feels like a breakout.

As usual, I will try to take different perspectives and put them all together for a conclusion. Let’s get started.

SIRI – Moving Averages

Let’s start with a chart of moving averages. This is a 1 year daily candlestick chart showing all the moving averages in perfect alignment from the 5 Day moving average all the way down to the 200 Day moving average.

If you only use moving averages for trading and investing and use signals like Death Crosses and Golden Crosses as trading signals, you can see below that you are late to the party. Those signals are called lagging indicators. They confirm what is already in place.

A very lucrative trading technique is to purchase shares on the first pullback to or below the 200 Day moving average after a Golden Cross develops. Using that method, you would have been able to purchase shares around the $4 level or below. After a mere 3 months, those shares have already netted a 10% gain. Not bad in a volatile market.

Analyzing SIRI Using Moving Averages on a 1 Year Chart

If SIRI’s uptrend is in place, look for support at the 10 Day average. The first dip to the 20 Day average or below is a buying opportunity in a new uptrend. A pullback below the $4.50 area to $4.40ish could be an opportunity to jump on the uptrend for any momentum traders.

Let’s look at a few more types of analysis and see what they indicate.

SIRI – Dark Cloud Cover Resistance

This next chart is a 5 year monthly chart that seems pretty bullish. If SIRI can close out the month of November at $4.41 or above, it will close above the resistance area from the Dark Cloud Cover candlestick pattern. That would be a very bullish sign for SIRI’s share price.

Analyzing Monthly Trendlines and Candlestick Patterns to Look at a Longer Trend That Could Be Developing

The MACD Histogram is just turning positive on SIRI’s monthly chart, possibly indicating that this move is the beginning of more to come. What SIRI needs to do to indicate strength, in my opinion of course, is close back above its main supporting trendline and take that over with great volume either this month or next.

SIRI’s main supporting trendline sits right above this month’s candlestick. A push above the main supporting trendline to the $5 – $5.10 area before a pullback to it sure looks possible at this point. At a minimum though, SIRI needs to close above the resistance area from the Dark Cloud Cover candlestick by the end of the month. If it does, that would be a green light to buy the next pullback and jump in on the trade.

SIRI – Double Top Breakout

This is the same 5 year monthly candlestick chart where I point out a Double Top chart pattern. The breakout from the Double Top was on buying volume that was above average, a bullish sign. While a Dark Cloud Cover candlestick pattern did form, SIRI’s share price only pulled back to the breakout area for the most part.

SIRI’s share price did not drop below the $4 area during the next 2 months that followed the Dark Cloud Cover candlestick pattern, indicating support above the $4 area.

A Potential Double Top Breakout on SIRI’s Monthly Chart

Placing a Fibonacci Extension Tool on the chart to determine SIRI’s shorter-term move suggests a $4.97 share price. Some stocks reach for the 261.8% Target Line with continued bullish news. While I don’t have it illustrated above, the 261.8% Target Line is at the $5.73 level. Having SIRI reach the $5 mark will be a milestone in itself. The jubilance could continue as Funds that were once prohibited from owning the stock because of the low share price can now buy in with a share price above $5.

These Funds could be big supporters in not letting the share price get below that mark as to not endanger their investment. That could mean big, strong support around the $5 area. Buying in on a pullback to the $4.40 area or below could pay off nicely if the buying support is there like I think it could be from these larger Funds.

SIRI – Upside Price Potential

This is a 7 year monthly candlestick chart with 2 Fibonacci Tools placed on it. The black one is a longer-term outlook of a couple of years. The blue Fibonacci Extension Tool is more immediate though, representing shorter to medium-term possibilities for SIRI’s share price in 2017 and 2018.

In true breakout fashion, SIRI’s share price should be able to reach the 161.8% Target Line at a minimum before any significant pullback of 10% or more. With more potential buying power unleashed at the $5 area, maybe waiting to see if SIRI’s share price can possibly reach the blue 261.8% Target Line before selling any shares might be a good idea. Playing a pullback from that are has less risk in missing out to the upside for those wanting to stay long in the name.

Calculating Upside Price Targets for SIRI using Fibonacci Extension Tools in the Event of a Breakout

Look for buying volume to increase in December as compared to November. That would be another indicator to continue staying long and trading SIRI to the upside on any pullbacks.

A true breakout should not break back below the $4.40 area. Any price action below that in the coming weeks should be a warning sign that a bull trap could be setting up. That is not what I anticipate but it is something to be aware of.

SIRI – Summary

Is this a SIRI breakout or fake-out? The charts all seem to lean towards and indicate a breakout. Getting in earlier on a potential long-term breakout could be lucrative not only in the longer-term, but the short-term as well. Just make sure SIRI’s share price closes above the $4.41 at the end of November. If it does, buy the dips.

The only real thing that I could see hindering SIRI’s bullish breakout is the speed in which the Federal Reserve raises interest rates in the coming months. It does seem like a raise is on the horizon in December based on recent comments from the Fed’s Janet Yellen. As long as the rates stay far and few between, SIRI should be able to navigate the waters. Any quick succession of raises could hinder or cause a consolidation of the share price at that time. Something to consider for the swing traders.

Starting out an investment in SIRI during a possible breakout could lead to significant profits for anyone with longer than a 1 year time frame. If a company with steady cash flow sounds interesting to you, look no further than Sirius XM Holdings (SIRI).

I just wonder when the day will come when the company “flips the switch” and activates all dormant radios with paid advertising (commercials). Think of how many would possibly listen, stealing more revenue from the industry. All of a sudden, Sirius XM Holdings becomes the industry.