In late October, the Sirius XM Holdings (SIRI) chart looked bullish to us. It was breaking out on the upside with our favorite indicators in gear, but it soon stopped short of our first upside target of $4.25. The downgrade by TheStreet Ratings got us to revisit our charts.
Looking at this updated chart of SIRI, above, we can see prices softened in December, but volume was light and the On-Balance-Volume (OBV) line was stable. Chartists or technical analysts often consider price dips or pullbacks on light volume as constructive because this shows traders are largely staying with positions. If volume expands on a decline, it is typically bearish as it shows more urgency to liquidate positions.
Last month, SIRI took a turn for the worse. The slope of the 50-day moving average turned negative. Prices closed below the flat 200-day moving average. The OBV line turned down, telling us the sellers became more aggressive. Last, the Moving Average Convergence Divergence (MACD) oscillator went to a sell signal as it crossed below the zero line.
This longer-term chart of SIRI, above, is not encouraging. Prices are now below the declining 40-week moving average. The OBV line has been pointed down on this time frame for the past three months. The MACD oscillator is negative. It looks like SIRI is heading down to $3.25 or lower in the weeks ahead.