Sirius XM Stock (NASDAQ: SIRI) Facing “Sudden Drop”

Stocks opened higher this morning, fell around noon, and rallied again by the close in another unstable trading session. Sentiment shifts from hour-to-hour, these days, and investors have found themselves caught in a “spin cycle.”

The major indexes all enjoyed moderate gains as a result. The tech heavy Nasdaq Composite, as usual, did the best of the three.

And like always, FAANG stocks were responsible for today’s strong finish. Apple (NASDAQ: AAPL) hit a new all-time high after Deutsche Bank analysts hiked its price target.

The bullish resurgence today came as somewhat of a surprise as new coronavirus cases spiked again. 60,000 new infections were confirmed in the U.S. on Tuesday.

Still, stocks climbed higher.

“It seems like you flip a switch when those Covid cases go up, the country takes a step back in terms of reopening the economy and all those names find high demand,” Christian Fromhertz, CEO of The Tribeca Trade Group, said in reference to Big Tech.

He continued, adding that “people will start to look at the more under-owned names once again” coronavirus cases start dropping.

Other analysts, like Vital Knowledge founder Adam Crisafulli, remain concerned about the ongoing pandemic.

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“The COVID numbers in the US remain troubling and this is beginning to create economic headwinds,” he said in a note.

Opposite Crisafulli is White House economic advisor Larry Kudlow, who believes the worst is well behind the U.S.

“No one’s denied we’ve had a huge jump in cases in certain hot spots,” Kudlow said.

“There’s a lot of scenarios here. We really don’t have any real experience in econometrics modeling for this type of thing. Because so much is generated by the virus. At the moment, we’ve created 8 million new jobs the last couple of months. […] Virtually every piece of data shows a V-shaped recovery.”

Meanwhile, many stocks linger in precarious spots. If the market has another “down day,” they could get crushed in short order.

Take Sirius XM Holdings (NASDAQ: SIRI), for example, which is facing what could be a larger sell-off.

SIRI, like many other stocks, peaked in early June, then dropped significantly in the weeks that followed.

During its descent, the stock set two lower highs (bearish indicators) while see-sawing above and below the 10-day moving average.

Now, after plunging below the 10-day moving average and its minor bullish trend (represented by the trendline in yellow), SIRI’s approaching another dip.

For that reason, should the stock trade below today’s low by a significant amount, it might make sense to take it short with a trade trigger of $5.67.

Overall, the market enjoyed a positive trading session today. But if the indexes give up their gains tomorrow, several stocks stand to dip severely.

SIRI is absolutely one of them, making it a great shorting opportunity for traders in the middle of the week.

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