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Courtesy Disclaimer: This post is intended to be NEUTRAL in nature, and to reflect MY OPINION ONLY of what I see. I make no recommendations; (I am not qualified). Besides, I am making public, part of a continuos analysis I make, together with my Uncle Gonzo, (not necessarily the best "trader" around, although he does not know that), and yes it is a long post.
So if someone out there does not like it, there is a button above with the word "next", click it, and in so doing, you will not have to read this. Finally, save the flames, I will click "next" and never read the damned thing.
However, I am interested in suggestions, ideas, etc., in a positive demeanor. While I believe FTEL is doing the best they can etc. etc. I also observe the market and in light of the evidence, the trend seems to be down (duh!), so instead of complaining, may be there is a way to take advantage of this "blow out to the down side"!
I do not take the position, that because FTEL was at $5.00, and it may become an important telecomm player in the future I ignore other evidence. The "other" evidence tells me that FTEL is going lower, as much as I believe in the company, sometimes price action does not reflect the possibility that FTEL will become an important player in the Internet Telephony Industry. The stock might be at "bargain prices". (Two different things, as in Amnesia and Milk of Magnesia).
THEREFORE, I HAVE to accept what the evidence tells me. (As far as the price action is concerned). I am sure you have heard of the "inefficient market idea" no?
If I do not accept the shown evidence, I would be acting like the Monty Python warrior, that after having lost both arms and legs to his opponent in fierce battle, the fool yells:
"Come back and fight you coward! Do not run away from me..." (never mind that he can not fight any more, remember no arms, no legs).
Of course, the opponent simply walks away, shaking his head in disbelief....
Finally, I post this in an effort to "reason" with those that are willing to accept that certain evidence, after all, may have some value. One more proof to me personally, that all zealots, in the end, will always get hurt, on their own.
Technical "Voodoo" Analysis, does have some relevance, (at least 1/3 to be consistent with my own prior opinions).
After, all, Lucrecia, the earth is not flat. (Pat, it is Lucrecia, not Lucretia... it is my Aunt, I know.) Or,.. If I tell you that the ass (donkey, now), is blue, is because I hold the paint brush in my hand...(with blue paint duh!)
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So, now to the point:
By the way the entire post is for general interest, I mention RB because he brought up an interesting consideration, which I investigated a little further.
RB you indicated:
>>The real considerations are to be determined in Congress starting in April when they look at the Internet Telephony sector as a Universal Service under the Telecommunications Act of 1996. Period.<<
I. General Considerations:
Very good point! Markets HATE uncertainty. If there is a hint that a government agency could possibly impose regulation on the nascent telephony industry, there is no way of knowing if such regulation may "protect" the big telco's, or put restrictions on what the Next-gen telecom may or may not do. Markets do not like this...
Regulation?
Look in here:
pulver.com
Please note in the above link there is something YOU can do, i.e.: influence the possibility of regulation on Internet Telephony, read the report, or contact the appropriate Senator/representative, if applicable.
Mr. Pulver is setting up a "conference"
pulver.com:80/itusp/
Quote from the above link:
"The meeting will take place at 7:30PM PST, on March 30th, 1998 in San Jose, California during the Spring '98 Voice on the Net Conference."
"Voice on the Net" Conference: pulver.com:80/von98/
"At a Glance" (re: the VON Conference:)
pulver.com:80/von98/glance.html
There seems to be a concern with "establishing common standards" as opposed to having several different "protocols", "technologies" etc.
What is my point? There seems to be "uncertainty", Market does not like this.
I am looking for:
1). Reasons why FTEL is sitting at these price levels.
2). Determine the "strength" of the current trend.
3). Determine if FTEL has now reach a "bottom" and a new possible entry point may be at hand.
4). Determine the possibilities of a "reversal" of the trend, and what possible level could be attained in the short/medium term.
II. - Technical Analysis Evidence (VOODOO):
Looking at an FTEL chart, we seem to have not only "stalled" and indeed "reverse" in the expected rise and trend, but we are sitting just above major support, ($3.163) if we hold here, this may be good news, if we do not, then possible next stop may be $2.75 even $2.58 might be feasible.
From the Voodoo manual:
-DMI has crossed over +DMI on 3/12/98 (bearish signal), that day we closed at $4.375, although the ADX line did not "confirm", other evidence (the general weakness of the stock; possible overhead supply as it has been proven by any attempt for FTEL to "ride up"), supported a "sell sign" then on 3/18/98, ADX turned up, giving "strength to the down trend signaled on 3/12/98. At that time price closed at $ 3.75.
Uncle Gonzo says, (This is him talking not me! so if you do not agree, send him a message). He says: If a "trader" had gone with the earlier signal on 3/12/98 (a "sell"), and assuming an earlier long position of 5,000 shares, then he has proceeds of $21,875.00 ($4.375 x 5,000 less commission). With the new price (today) of about $3.25 (ask), potentially, this would give him an improvement in his position of 1,730 (rounding), additional shares, or 34.60%. (1730/5000 * 100 = 34.60%)
If he/she would chose to enter a long trade, at this point, some time today. However remember NO buy signal has been given yet! Other considerations could have been made to enter the new trade. This in an attempting to "jump" the signal, however, not always a smart thing to do.
Given the current weakness and indication that the trend is "down", then the possibility exists that a lower price may occur, and a more attractive entry point is ahead. ($2.75 weekly chart to $2.586 Daily chart). The proviso here is if we can hold support at $3.163, then we may rebound.
An essential consideration is the belief in the company and its future. If such consideration is positive, then at any point now "seems" a good entry point, one would have to closely watch the daily price action to determine the moment in which a "reversal" of trend would begin to occur.
This requires is a much finer eye, (intraday), a clue, may be a weak opening all of a sudden becoming stronger as the day progresses, indeed a strong close would suggest so. Again, this is very tricky, as we have seen with FTEL in the past.
Uncle Gonzo, (not me!), is indicating that the fact that we are at such low levels, the risk has been considerably reduced.
He may have a point, but risk is never eliminated, today's price action so far, seems to suggest, that we may touch $2.75 (on a closing basis).
In spite of the fact that, as it has been suggested by Mr. Harvey, that most of the trades seem to be buys, (Today excepted), there may be a great supply overhead, that does not allow for these "buys" to raise the price, i.e.: many sellers, out there, "disappointed" and "not fearful" that they would not get a higher price as they sell.
Buyers seem to be agreeing with Uncle Gonzo, they are slowly absorbing the supply, but not really convinced that "this is the bottom", they are simply, attempting to "jump" the signal.
Uncle Gonzo says sometimes, do not shoot until you see, "the white of their eyes"... well, I say, "easier said than done".
It will be very interesting to observe the price action in the next few days to see if a final "blow out" to the down side takes place. Where the last sellers, giving up in desperation, throwing the towel, for the real smart "Uncle Gonzos" of the world (assuming they actually carry out their strategy), to come in and go in and enter FTEL at around $3.163, or...
Remember, in Uncle Gonzo's example of the trader with $ 21,875.00 above, at a bid of $3.163 (and assuming an "ask" of $3.25), that would give 6,730 shares (an improvement in the position by 1,730 shares or 34.60%.
A possible rebound to "resistance" to $3.90 would yield a profit of $0.65 x 6,730 shares = $ 4,375.00. (Less taxes & commissions)
Obviously the higher FTEL goes, the higher Uncle Gonzo's profit will be.
Uncle Gonzo seems to be one of those heartless short-term "mercenary traders", that do not seem to have other considerations than mere profit in his horrible little mind.... I wonder why ??...
No consideration to how many warrants are out there, waiting to be zapped, at the earliest convenience. No consideration as to how many shares Evil Frank and Knevil Tom have sold, no consideration to the "vision thing" of the world wide telecom of the 21st. Century..... Blah, blah, blah.
Pure greed, selfish, horrible nasty profits.... Oh what heartless person Uncle Gonzo is, I wonder what he is doing playing in the stock market?
Do not forget that NO "long" or "buy" signal has been issued, and after today, things do not look bright at all, a lower price may be shown.
On the other hand, this may be the "blow out" special that final "holders" throw in the towel in desperation. Time for the "value boys" (the real ones, notyouknowhobetternotmentiondevilasheisaround), to start showing up, maybe Uncle Gonzo and crew made up his mind and started buying at the close, to lift the price to $3.25. That may be a good signal, but may be not. Certainly the risk has been reduced, but should one wait for a change in trend, and a confirmation?
Well that is up to the brave ones to take and accept the risk, perhaps an "opening" position might be desired, and increase it as the "picture gets better".
What kind of signals, must we look for in the Voodoo thing? Uncle Gonzo suggests:
1.) +DMI cross over -DMI,
2.) Preferably, with a confirming "up" turn of the ADX, and/or
3.) Reaching the 13-week moving average ($4.461), preferably if this is done with great volume.
Of course, that means that the "possible profit" from $3.25 to $4.461 would be waived.
Ah! But see that is what risk is all about! then again, if one goes in "early" one may be catching a "falling knife" (and cut you!).
So what is one to do? anticipating that, I asked Uncle Gonzo, he said (with his typical pompousness, once he knows he has my attention)
He says, use your head!... (Who, me?).
FTEL announced the final definitive agreement with WCOM. These are factual news. I would say that is very good, I mean WCOM has agreed to have FTEL S-L-O-W-L-Y place their little DVG's, (or are they DIVG's (!?)mmm mmm), throughout the world...
Can that be done in a few days? No. It will take time, how long? well, long, it is a big world. There are a lot of "protocols", legal issues, marketing issues, international agreements, etc.
There has been a lot of whining, that this stuff is taking too long, man, what FTEL has no sales? no agreements, no nothing?
Well, it takes time. What company is going to rush and order 250 DVG's just like that, deploy them, just like that, "snap" a finger, bingo 250 x 20,000.00 = 5'000,000.00 first order, next!
Oh yes! These DVG's are for world wide deployment, where the long distance fees are high, and we are Super-Ftel to the rescue, we will deploy them and de-throne the local ugly government monopoly, or local big ole blue meanie...
Oh yea?
Look at this:
III. - The global view.
It has been said that the international telephone call market is where the money is (big profits and all that, yes?).
Of course, it is who is collecting all those profits/fees etc.
Well governments, government owned companies, and recently, formerly government owned companies, turned into private little banks, (oops, no not private little banks, actually former Telecom)...
Sorry Mr. Slim, did not mean that, just kidding. For those who do not know, Se¤or Don Carlos Slim Helu is the Chairman, General Manager, C.E.O., and "Overall Supremo of all the Chiquititas" of TELMEX.
I suspect he would say: "Judge Green? we need no steenking Judge Green around here...."
Why?
One example:
I have a hard copy of the "Latin America Monitor" (March 98 edition), I looked up for an on line copy, all I found was this:
1. businessmonitor.com (Home)
2. businessmonitor.com (Caribbean Page)
3. businessmonitor.com (Free Report)
The hard copy I refer to, is NOT "on line" (That is the "Mexico Report" March/98 issue). I believe you can request a free copy on the URL # 3 above. You may be able to obtain it there.
This report reads as follows:
COPY BEGINS***********************************
"Telecomm Dispute Escalates"
The bitter row between US and Mexican telecom operators is now jeopardizing investment levels in Mexico and threatening to produce wider trade tensions. US company MCI has threatened to delay plans for investing US$900 million in its Mexican venture, "AVANTEL".
"MARCATEL has also frozen its US$75MM capital spending plans for 1998.
AT&T which it is one of the three partners in ALESTRA, had appeared to be taking a more measured stance, but is now threatening to stop paying the charges levied by TELMEX.
Foreign entrants to the Mexican market are complaining vigorously over the charges that they must pay TELMEX to route their long distance calls through local lines. The charges are certainly high, with rates set around US$0.47 per minute, including a surcharge which was approved by the Mexican government in order to help TELMEX expand its local service. The charge is around four times the true cost of the service provided. The level of charges was, however, well known and rates are also set to fall slightly by 1999.
The main problem has been that TELMEX's competitors have not secure as any customers as they need and are, therefore, making larger losses than expected. Effectively they underestimated the strength of TELMEX and probably customer inertia.--Avantel and Alestra have not been able to push their individual market shares above 12%. The threat to withhold investment is virtually blackmail and they have also called the US Federal Communications Commission (FCC) to block TELMEX's planned entry into the US market. The FCC appears ready to battle with TELMEX. Moreover, MCI has urged the US administration to institute World Trade Organization (WTO) proceedings against Mexico, complaining that the Global Telecomm Pact, completed only two weeks ago, has been violated.
For the Mexican Government, inward investment remains a vital prop for the economy, and any shortfall would be a serious blow. The Mexican government also wants improvements in the telecoms sector, given that Mexico still has a telephone penetration of only 10 lines per 100 people. TELMEX also needs to expand in the US. The most likely outcome is therefore that the fees are re-negotiated, with planned rate cuts brought forward. This however, would certainly irritate the Mexican authorities. AS well as potentially hurting TELMEX, the affair does therefore, increase the risk that trade relations between the US and Mexico will deteriorate further.
END OF COPY***********************
Anyone NAFTA? Tennis or ?............
Again this is from the "Latin America Monitor"
businessmonitor.com (Home page)
179 Queen Victoria Street,
London EC4V 4DD,
United Kingdom.
How is this relevant to FTEL?
Well, Mexico, as most other countries, use the long distance calls to "milk" the customers and the companies, (where privatization has taken place), and it is a MAIN source of badly needed revenue. Now, you do not think that these "nice" guys are going to simply "roll-over" and let the US firms come and steal their bread and butter little revenue do you? I do not think so and it will be an ugly fight, because it has larger repercussions, beyond the Internet Telephony Industry.
So it may be that the real answer will be to do as FTEL is doing, or a combination thereof, meaning, yes form alliances with the big guys (as with WCOM), but also, slowly deploy the DVG's around the world so as to "technically" avoid a direct confrontation with the likes of TELMEX, this would be possible because the DVG's would be installed through ISP's rather than with an official TELCO. This would simply mean that the DVG's would be part of the ISP's different services offered using the Internet. Easier said than done. In addition, it will take time to execute.
Would WCOM, or anyone, place a large order without considering the above possible "details"? I do not think so. Even if they evaluate the units and like them right away, decisions of this magnitude may take time... S-L-O-W-L-L-L-L-Y...
So, what, I say, there are a lot of poor little investors that bought FTEL at $4.00 and they want FTEL to go to $10.00 now, so what are they waiting for, come on! Buy the damned things now, I have to retire before I die!! Yea right....
That is assuming they decide to let the Internet be unregulated, I will remind you of the link from Mr. Pulver, as I indicated above, in re: regulation threat...
pulver.com
So, after all, FTEL/FNET may have the right approach, however I do believe that FTEL perhaps should become part of Mr. Pulver's team, in order to participate in Mr. Pulver's possible future influence amongst the regulators.
All of the above is, of course, only my opinion, and it is very possible, that I could be wrong.
Anyway. I keep observing from the penalty box, from this perspective it seems quiet and comfortable...
Other links of interest:
Pulver: "Von Coalition" pulver.com
Pulver's project Free World Dial-up (FWD)
pulver.com:80/fwd/index.html
And "IP Telephony" MoU: This link has been already provided by Rick, post # 30885 Message 3816821
pulver.com:80/mou/
Uncle Gonzo told me that he needs FTEL at $1.50 by the end of April, he sold some old rental house he had been struggling with and he'd rather buy more of these FTEL things, rather than going into a starker exchange. He does not mind paying the capital gains, at $1.50 he says he can get a gazillion of them at that price.... he will make up the tax as soon as FTEL moves back to support.
I wonder, may be FTEL may want to hire Uncle Gonzo as a "PR rep."... No, I do not think that would be wise... |
