From time to time, I will update readers on popular charts we discuss in the chat or that I am asked about through my contact page on here and Seeking Alpha/Twitter. Tonight, I’m going to briefly discuss the charts for GoIP Global (GOIG), Sirius XM (SIRI), and Thresher Industries (THRR).
GOIG
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Technically speaking, this chart is not pretty. The negative trending A/D line and OBV are terrible for any stock. The CMF (15) is under heavy pressure as well. The only bright spot is the volume is ridiculously low. However, a PPS trending south on lower-than-average volume is not necessarily a sell signal. Many times, it’s a good sign as heavy selling is considered a real sell signal as shareholders are running to the exits as quickly as possible. Another important point of note, the Market Maker SEAB still seems to have a fair amount of shares and has been inactive lately, it seems. Therefore, I believe he is still holding and it would be in his best interest to run the price up once again as he did when GOIG went to $.06. What his exact plan is or timeframe, I don’t know. Taking into consideration the opportunity cost of holding a stock which is stagnant, I will wait and see if something comes to fruition on my thesis based around SEAB. However, if it continues to drag on even if SEAB is still holding, I will have to sell and move on to where my cash is better utilized for quick gains. For now, I’m still holding but wouldn’t be surprised if we downtrend some more until SEAB resumes activity.
SIRI
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I hope many of you actually heeded my advice when I informed everyone with plenty of time per my Stock Talk updates on Seeking Alpha, Twitter, Live Chat, and even articles that SIRI is setting up for a sell-the-news reaction. Some people thanked me but I was shocked to receive more emails of people asking me why the selloff when I clearly stated it multiple times through as many communication outlets as possible. Join the live chat during market hours, I answer questions all day long in there with some other intelligent stock market enthusiasts whom I admire.
Per the chart, you will see the RSI growing significantly higher leading to the close before earnings. That RSI is clearly in overbought territory let alone the fact that the price was pushing over the top Bollinger Band which is again, another overbought signal. If you view longer monthly intervals in SIRI, you will notice the RSI is very high in them. That again, signals we are leading towards overbought territory. There are some signals that would say even with a high RSI, the stock may not sell off, but SIRI did not show any of those hence my reiteration of a sell-off unless some amazing news came out which caught everyone off guard.
The good (and bad) thing is we didn’t really sell off hard. The A/D line shockingly was strong today and trended north, even with the indices posting significant drops a few hours into the markets open. The market itself did not seem to faze SIRI. However, the weak selloff did not allow the RSI, over monthly intervals, to reset any further than near neutral territory. That, by itself, limits the upside potential. One important note is the weak OBV line today. A weak OBV line, while the price trends north, typically means the buying strength is not as strong as it may seem. So be careful on that.
Even though SIRI did not seem affected by the market itself today, I am still playing defensive until I see the dip buyers come to the rescue of the market, as they have done so often this year. I added some SIRI today, near the lows, and will add over time but I am in no rush. I am holding for a long-term position and will add heavier when I see us dip to favorable prices again with much more upside potential. Basically, I don’t anticipate trading SIRI until the prices dips lower but I am very bullish on it long-term still as an investor.
THRR
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I initiated a trade in THRR today, immediately after the announcement of the buyer and quick investigation that it seemed legit. The stock started to takeoff and I thought we would definitely see much higher prices. Instead, the amount of sellers already waiting outnumbered the buyers today, limiting the upside potential. Had I peeked a bit longer at the L2, I would probably have seen this and correctly waited. Even though the PPS did not skyrocket, the chart actually looked pretty good with the A/D line trending north along with the OBV and the CMF (15) showing strong buying pressure most of the day. The fact that it downtrended when the volume started to die off was also a good indicator not to panic sell, as I stated in the GOIG analysis above. These are all bullish signals however the very end of the day saw a strong selloff which I attribute to daytraders exiting their positions. This selling could continue tomorrow but I expect more buyers to come in at these favorable prices as the potential buyout looks more promising now than it did just a week ago. However, that does not in any way mean this deal will go through. I would not be shocked if it did not go through, or at least at a different price than the initial agreed upon price of $.01 per share. I am considering adding more shares in the morning if the chart recovers from the traders exiting at the close today. The risk/reward, while still very speculative, seems favorable to me.
As always, do your own homework to see if you agree. Get into chat during the market hours or follow me on Twitter or Seeking Alpha’s Stock Talk as I respond to messages on there as well. See you in the morning. Good luck out there.
Mike
At the time of publication, Kudrna was Long GOIG, SIRI, and THRR but positions may change at any time.
