Buy the Show (SIRI,DIA)

Buy the Show (SIRI,DIA)

 

Just when you thought earthly existence couldn’t get any weirder, the country takes another step deeper into the twilight zone.

 

Q: How do you mean, Matty?

 

Well, let’s put it into everyday terms – once, politics and journalism were straight up affairs with a measure of integrity, even if both were run and operated by garden variety schemers and crooks.

 

Then, along came television and internet, and over the course of a few measly decades the whole democratic project was turned into a massive entertainment bijou.  Yet all the while, that semblance of integrity was outwardly maintained, both by politicians and the self-styled ‘gatekeepers of democracy’, the news establishment.

 

Q: And now?

 

Now all pretense is gone.

 

Today we live in a world of pure show business, with the whole bluff-puffed edifice crumbling left and right before our eyes.  There’s nothing left but the show.

All of which, we believe, is a good thing – in a number of ways.

 

Hunh?

 

Until now, there were a great many who believed that the old-world integrity and solemnity that accompanied the men and women who pulled the levers of power in this country was real – that the truth and earnestness and desire to serve were genuine.

 

Today we know otherwise.

 

Today it’s clear that the whole thing was a bluff, a giant Barnum and Bailey three-ring circus extravaganza, with every clown and every trained dog and pony duo exposed for what they really are.  It’s all been undermined and revealed for nothing more than a whoring after fame and riches.

And that’s the good part.  The deception is over.  It can’t be hidden anymore.

 

The process will take a while to run its course, of course, but because it has come this far, there’s hope that the skid-lickers will eventually be driven off the tracks, and with any luck people of genuine moral standing will reassume leadership in those two most public and most important of professions.  There simply won’t be any chance for blackguards and vamps to climb the ranks.  They’ll be exposed immediately and sent shamefaced and naked from the Eden they so long to inhabit.

 

Take Senor Scaramucci, for example.  The man reputed to possess the most explosive bowells this side of the Pecos Mountains was sent packing from his newly acquired West Wing digs a mere ten days after landing.

 

We’ll never know if he was for real or not, because decorum and propriety still have their place in the show.  But a show it is.  And it must go on.

 

And we’ll come back to that show in a moment.

 

But first, we have to address an open trade.

 

The whole affair was opened on March 30th in a letter called Theory and Practice.  There, we advised you to consider selling the DIA June 30th 210 CALL for $2.04 and buying the IYT June 16th 175 CALL for $1.15.  Total credit on the trade was $0.89.

 

When push came to shove, the IYTs expired worthless, but the DIAs had to be rolled out, and on June 29th we did exactly that.  The letter was called The CAT Came Back, and in it we wrote –

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Today we face a similar predicament.  With the options expiring tomorrow, we have to take immediate, swift, evasive action of the same variety.  And we’re doing it as follows –

 

The DIA August 4th 210 CALL now trades for $10.20.  Buy it back and sell the DIA September 15th 210 CALL in its place for the same $10.20.  You thereby buy another six weeks’ for the trade to pan out.

This week’s trade brings us to a deeper look at the media and its array of largely successful equities in the print/internet and entertainment domains.  Social and new media we leave aside for the moment.

 

Overall, the sector has seen a tremendously successful run over the course of the entire bull market, as the chart of the Power Shares Dynamic Media Portfolio ETF illustrates (NYSE:PBS) –

From the bottom of the Lehman Bros. bear market in early 2009, PBS climbed five-fold, topping just under $30 most recently.  The latest push has also sent the shares above an important resistance line that spanned the better part of three and a half years (in red), indicating there’s likely more juice to be squeezed from the media fruit basket.

 

We note, too, that much of the strength in media outlets over the last year can be attributed to presidential election coverage that began picking up steam in the winter of 2016, and hasn’t relented since.

 

As the charts below show, however, two of the key corporate players in that coverage have seen vastly different tallies in their share prices, and that may come as a shock to avid news junkies.

 

Have a look –

This is the New York Times (NYT) posted against 21st Century Fox (FOXA), parent of cable news frontrunners, Fox News, since the presidential election back in November.  And it clearly shows the variant courses of two bellwether media equities, a point we offer solely to indicate that the sector is by no means monolithic.

 

The stock we’re focused on for today’s trade, like the New York Times, has seen banner returns since the election and a run-up unlike almost any other listed media company in America.

 

It’s Sirius XM Holdings (NASDAQ:SIRI), a subscription radio outfit that just last week also popped above a five month resistance line (in red, below), and looks healthy going forward.

We believe the shares will pull back to test former resistance (now support) before continuing their advance (blue circle).

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Many happy returns,

 

Matt McAbby

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