Afternoon John: The 'Golden Rule' of Technical Analysis when it comes to pennants and triangular consolidations, is that invariably the price bars exit the triangle in the same direction that they entered, ie. Up!
Since this is such a classic text book example that would shame most of its peers, it might be considered worthy enough to be included in "Edwards and Magee's Technical Analysis of Stock Trends" (better known as the Chartist's Bible).
That being the case what is the market and this unusually precise formation telling us?
It's telling us the FNTN has many more surprises that lie ahead. The big question in Elliott terms is, if this is still part of a 1 impulse wave and the pennant is a 1 - 2 consolidation, then the third wave will be ifinitely more powerful and explosive, as third waves invariably are, usually eclipsing by a factor of 2, the power of the first wave both in terms of time, price and amplitude. This is especially so in the case of such a classically bullish structure that currently exits in the form of FNTN.
Some time back, I made the case that the long base consolidation was really a series of accretive 1 - 2 impulse waves in disguise. Several important revelations can be gleaned from this theory. Firstly, the mildness of each correction back into the base, but not below it following each surge was indicative of strong underlying fundamentals. Secondly, the upthrust power of each surge gave us the hint that when the 'real' breakout would come, it would be a 'dazzler'.
The multiple 1 - 2, power impulse and pullback waves already in place imply that a truly significant bull market still lies ahead of us in this issue. Equally, the mildness of the pullback in the pennant correction thus far is a sign of great underlying strength and resilience, while building new a whole new value at higher levels. This in turn bodes extremely well for the future action in this stock.
If you don't appreciate the importance of multiple 1 - 2, impulse and self-corrective formations, I would point out to you, that the first leg of the Greatest Bull Market in History, which up until yesterday we were still in and making new record highs, spent the first eight plus years of its life from 1982 to 1990 making multiple 1-2 impulse waves as it worked its way steadily higher. This was really the only 'big clue' that offered any inkling of insight into the 'potential length and greatness' that still lay in wait for this Bull during what have now become the roaring 90's.
The 'real power' of the "Third Wave" did not kick into high gear until January 16, 1991, when the Dow had a 70 point opening gap followed by a 500 point buying stampede and has never looked back. That is often, but not always how third waves tend to unfold. It is clearly evident, that the Dow Third wave has been immensely more powerful than anyone ever expected or imagined and has been significantly stronger than the 8 year combination of its preparatory impulse waves of the eighties.
It is particularly instructive and intuitive to recall, that at the end of the eighties, most people believed that decade would be a hard act to follow and that the 90's would be a pretty boring period investment-wise. At that time both Government and Private economists alike were forecasting anemic growth at best. They could not have been more wrong!
Just as each of the last few consecutive years of blistering market performance have equally and successively been thought of as a tough act to beat, the same could be said about FNTN's performance to date.
That is exactly what all the sellers have thought, during this amazing internet growth era that we have all recently been experiencing. As each Internet Stock took its turn and began unfolding in its initial multi-hundred percent gain phase, most sellers thought that was as far as they would go, only to watch them really take off in earnest, leaving the many doubters in the dust.
As I said in another post, I think the personal attention and interest that Josephberg will afford them could become invaluable and is hard to understand or describe, because none us know how the relationship evolved or why. We just know that the relationship looks promising.
Even though some Blue Chip household name IBs were apparently interviewed, they chose to go with Josephberg, obviously for many and varied reasons. From the comments expressed in the press release, it would appear that the 'chemistry' of the engagement and the eagerness of the IB to get involved with something as exciting as this is for his industry had a lot to do with reaching the ultimate decision. Once again, it appears some are attempting to micro-manage the company from this thread via the Internet!
Furthermore, it is totally unrealistic to expect that some Wall St giant was going to bend over backwards and afford that kind of time and attention to an emerging minnow like FNTN at the drop of a hat. Not even William H Gates III was afforded that luxury in his early days.
Everything that Gates has done in recent years has become more and more obvious as the logic of his pioneering work has been increasingly validated and revered. Yet, I can wholeheartedly assure you, that it was extremely difficult to envision all this, let alone convince people of the future as we now know it, back in the bad old 286 days. Wouldn't surprise me if, even he was shown the door more than once in his incredible lifetime.
I received another inquiry today, this time from a friend at a major foreign bank where the possibility of installing secured intranets in each of its branches was recently discussed. They are FNTN shareholders and the rising share price appears to have more than just raised their attention level and interest.
Folks, this bank has over 1000 branches. Naturally, I did the right thing and passed on their request for info. I hear things are progressing nicely with the other institution.
A very good evening to all
Rgds
Wiz |
