In an earlier update, I highlighted the bullish trends of Sirius XM (SIRI) shares. As the consolidation period continues, a triangle pattern had begun to form on my intraday point & figure charts. On Friday, Sirius XM shares broke out of that potentially bullish triangle pattern, and right into an even more positive bullish catapult formation which will confirm if SIRI shares can hit $1.32. Tom Dorsey of DWA explains the bullish catapult:
The Bullish Catapult is a combination of the Triple Top buy signal and the Double Top buy signal. This pattern is a confidence builder. The Catapult is created when a stock gives a Triple Top buy signal which is followed by a pullback producing a higher bottom. Following the pullback, demand regains control and the stock reverses back up and gives a Double Top buy signal. The charts below depict a Bullish Catapult formation.
This is a pattern that you can be aggressive with especially when the overall markets are in a bullish mode, the underlying sector is in a bullish mode, and the fundamentals are superior in the stock:
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As Tom Dorsey writes, this pattern is a confidence builder. It demonstrates that demand is outpacing supply, and further stock appreciation is likely to occur. Point & Figure Charting: The Essential Application for Forecasting and Tracking Market Prices (Wiley Trading)
I have alerted on this pattern with Sirius XM three times before, two of which resulted in very high gains while only one fizzled out without cause. Looking back on the chart since September, there has not been a single sell signal on the charts, yet there have been three buy signals as indicated by the green arrows. The higher bottoms as indicated by the red highlighted areas, are buy signals in and of themselves as well.
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At 1.32, the bullish catapult formation will occur, and the likelihood is that Sirius XM shares will rise even further than they already have. If for any reason the catapult breaks down, $1.24 should offer support. $1.23 would be the first sell signal given in more than a month. More on that should it come into play. For now, the catapult is the play, and all signs point to further gains in Sirius XM shares.LINK