Sep 10, 2010 8:47 AM PDT
I've debated whether or not I should say this about Sirius XM Radio Inc. (NASDAQ:SIRI) now, or wait until it actually happens to point it out. I've decided to go ahead and talk about the potential demise of this small cap now though, as if I wait, it may be too late to do anything about at the time the worst pans out.
In simplest terms, SIRI is slowly and subtly approaching some major support lines that go back to early 2009. The upper one (black) is at $0.95, while the lower 'last bastion' one (orange) is at $0.88. I know neither has failed yet, but both are in reach. I just don't want anybody to be caught off guard if this slow, almost imperceptible pullback from Sirius XM Radio takes a turn for the worst. After all, it would be easy to just call this slow-down a volatile patch. It's more than that though.
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Don't get me wrong - I'm thrilled Samson Oil & Gas Limited (ADR) (AMEX:SSN) was able to punch through the resistance level at $0.84 (orange) and move on to today's peak of $1.06. It's just that it all happened so fast - and without the right kind of base - that I see a substantial retracement for this small cap stock in the very near future.... perhaps all the way back under $0.84.
The fact is, we've seen this move from SSN several times over the last year. Each one seems to carry it a little higher than the prior one, but the interims (the pullbacks) can be murder. And, factoring in how we're seeing a doji bar today after a huge five-day runup, I think it's (1) wise to at least take partial profits, and (2) not add any new Samson Oil & Gas Limited positions until we revisit the $0.80 or so. 
And finally, my contrarian blood is boiling again. This time it's about VIVUS, Inc. (NASDAQ:VVUS), which was rated today (among message board users) as one of the 'most bullish' stocks out there. Let me be clear about something though..... VVUS isn't one of oday's most bullish ideas - it was one of yesterday's biggest gainers, and traders are chasing the gain.
Unfortunately, those traders have thus far been oblivious to the fact that VIVUS is topping out again at the same spot it ran into trouble in May, and even back in September of last year. The failure of this small cap to follow-through today (in terms of volume as well as in terms of price progress) suggests to me that the buying was a one-day-wonder, and an opportunity for someone else to dump shares onto unsuspecting buyers. Be careful.
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