Sirius XM Holdings (SIRI)

In my opinion, Sirius XM Holdings (SIRI) had one of its greatest moments in several years last week. It was disclosed that Berkshire Hathaway had accumulated an approximate half billion dollar investment in the company.

Why do I think that this is one of the greatest moments for SIRI? Well, when you have a “buy and hold a long time strategy” like Berkshire Hathaway typically does, it helps to basically remove some of the shares from the supply of shares in the float. There is a good chance that Berkshire will also increase their position in the company. In their most recent quarterly filing, Berkshire increased their stake in Apple by three-fold. Could they do the same to SIRI and basically remove even more shares from the float? You bet.

Compound Berkshire purchases with continued share buybacks from SIRI itself, and the supply of SIRI shares will start to become less and less. When there is not enough “supply” to meet the demand, share prices tend to rise faster.

SIRI – Long-Term Price Objectives

For long-term upside price targets, refer back to a previous article for SIRI I wrote a couple months back.

“11/20/2016 – SIRI Breakout or Fake-Out?”

Specifically, look for the section titled “Upside Price Potential”. Under that section, you will see a chart that has 2 different Fibonacci Extension Tools overlaid on the chart. The black Fibonacci Extension Tool calculated some high probability long-term price targets. Those price targets would be the 61.8%, 100% and 161.8% Target Lines from the tool.

The blue Fibonacci Extension Tool in the above update provides for shorter-term price targets, but we will take a closer look at some of those next.[s2If !current_user_can(access_s2member_level1)]….

If you want to continue reading this article for Sirius XM Holdings (SIRI), you must first login. I review short and medium term price targets as well as a major risk that I see brewing for the company.

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SIRI – Auto Loan Bubble Brewing?

While watching market videos and reading articles over the weekend, I came across a very interesting video from ElliottWave.com that talks about a bubble brewing with auto loans. I’ve provided a link to the video here, however you must first register with ElliottWave.com (which is free). After you register, you should be able to access the link.

“A Trillion Dollars in Auto Debt: On Borrowed Time?”

How could all of this auto debt directly affect SIRI? If the auto loan bubble pops like the home loan bubble did back in 2007, it could mean a cessation of low quality, low down payment loans. That could really hurt auto sales in coming years. While this risk does not seem imminent, it is definitely something to keep in mind as auto loans continue to skyrocket as a percentage of household income.

Also, a trillion dollars sure does seem like a lot of cash for an asset that only loses value over time.

SIRI – 5 Year Monthly

This 5 year monthly candlestick chart shows confirms that SIRI’s breakout is still in progress. The MACD Histogram on the monthly chart continues to show increasing buying momentum.

Using Fibonacci Extension Tools on a 5 Year Chart to Calculate Upside Price Targets

As February 2017 draws to a close, compare the total volume for February 2017 to January 2017. If February’s volume is greater than January’s, SIRI’s should be able to reach for the upper end of the gray shaded box. If February’s total volume ends up being less than January’s, it could be signaling that a short consolidation period is near.

Either way though, stay long until at least the MACD Histogram on SIRI’s monthly chart indicates a slow-down in buying momentum on the MACD Histogram. Share prices can still rise even with a slow-down in buying momentum, but those price increases tend to happen at a far less rapid pace.

SIRI – Trendlines

This next chart is a 1 year daily candlestick chart for SIRI. The MACD Histogram on this daily chart indicates that buying momentum is increasing on it also. Buying momentum on a monthly chart is considered to be long-term buying momentum whereas buying momentum on a daily chart is considered to be short-term buying momentum.

Analyzing Overhead Trendline Resistance for Sirius XM Holdings (SIRI) on a 1 Year Daily Chart

The other items that looks kind of interesting on this chart is the 2 overhead red trendlines. The origins for the trendlines are not on the screen as these two trendlines began in April 2009 and October 2011. However, these two overhead resistance trendlines seem to match up pretty close with the lower and upper ranges of the gray shaded box on the first chart above.

Sirius XM Holdings (SIRI) – Summary

The breakout for Sirius XM Holdings (SIRI) continues. With buying momentum on both its shorter-term and longer-term charts, any pullback of 5% or more before reaching the first overhead price target of approximately $5.25 appears to be a lower risk opportunity to jump on the uptrend for SIRI. If you are currently long, stay the course.

Good luck trading.

On deck: ETSY