Wiz's Update to his Newsletter “Financial Intelligence” of yesterday. Posted here by Bill Fortune III with permission from Financial Intelligence.
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STOCK SPOTLIGHT - FNTN PART II
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Financial Intranet acted very well today in my view. Although some alarm was expressed over the unusual wideness of the spread, there was plenty of bidding at lower levels and the market ended up floating to the high of the day on featherweight volume during the final hour of trading. This step up to the days high could bode very well for an opening gap of as much as 5 to 10 cents in the morning. Should this be so, it would likely set off a chain reaction of buy orders that could hold the potential to send this issue extremely sharply higher.
Consider another important gem from the annals of technical analysis: When a market has been banging away at a strong resistance level for a while, in the case of FNTN precisely on three separate occasions, it often backs off from that level to re-energize itself and then on the fourth attempt it invariably not only succeeds in taking out that level of resistance, but again, invariably does it with some panache and style, often taking out the key level with a real vengeance the 'Fourth Time' around. This is a very reliable pattern that manifests itself frequently over time in all manner of different market circumstances, both up and down.
Another interesting point, assuming that we successfully overcome this troublesome $1.00 threshold and trade well above it, it will in all likelihood become a significant level of support on any retest of that level. The next most interesting gem is how the market may behave thereafter. As I have already promulgated on a number of occasions, is my belief that there is a price and volume vacuum in the area extending from about $1.10 to the $1.75 to $1.95 level, which I personally view as an extremely important previous value area that is likely to have a very magnetic effect on prices, once they break convincingly above the $1.00 level.
Many of you have grilled me over whether we may encounter resistance at the $2.00 level. The answer is probably no, for the following reasons.
1. When a market has a lot of trouble at a major resistance at say a $1.00 level, then it often behaves the exact opposite at the next major 'perceived' resistance level, ie. $2.00. If it has trouble at $3.00 then it may breeze through $4.00, even $5.00 and so on up to the $10 level.
A long term vivid illustration of this can be demonstrated by studying the behavior of the Dow Jones Industrial Average. The Dow took over 10 years to break, through the 1000 level, (feels like FNTN at $1.00 ugh), yet it only took the Dow one day to go through 2000 and it never looked back. It took eighteen months for the Dow to go through 3000, yet it only took one day to go through 4000 and again never looked back and it only took a week or so to go through 5000. It's had a lot more trouble at some of these higher numbers, but my bet is that when it eventually happens, we may all be surprised by the ease with which it may traverse the 10,000 level. Obviously this is not necessarily cast in stone, but it can be a useful guide in determining future behavior at different milestones based on previous action.
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FNTN's HISTORY
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In Elliot Wave terms, Wave 1 occurred from the October 97 low and was highly explosive in nature on massive volume, a sign that was a very positive omen for FNTN's future. This first impulse wave was followed by a large ABC corrective wave 2 as it began to become part
of a long 9 month initial base that formed either side of this initial ground breaking event.
Then there were a number of minuette and smaller 1 - 2 waves that followed, including some more pronounced waves that occurred during the first quarter of 1998, as FNTN began to become somewhat more dynamic in structure, expressing rumblings of wanting to break out of what had by April become a nine month base. Then the Internet stocks took off on their first real surge and that catalyst propelled FNTN from a level of .25c to the 90 cents rising over 300 % in value in what I would describe as another powerful 1 impulse wave that in some respects counterbalanced October 97's blastoff.
What followed was a rather complicated lower level base building consolidation, before another major impulse 1 wave exploded the stock to the 2.20 level. After building values around the 1.75 level, FNTN eventually succumbed to a much deeper but never-the-less text book, ABC correction taking it to completion at the lows of October. Although this was an unnerving experience for many, it was already beginning to sow the seeds of eventual and renewed strength, the beginning of which we are now experiencing.
The lows of October actually produced 4 minor impulse upwave 1's, but resistance at $1 forced the market back for a retest of the October lows in order to re-energize for the next upmove, which following another abc correction, actually paved the way for Financial Intranet to explode into its first 3rd wave of its existence punctuated by a confirming breakaway gap.
The fact that we are now potentially in a third wave, the longest and strongest wave formation should not be lost on investors. Third waves are all powerful in technical terms and in the very truest of fundamental terms, often reflect a significant advancement stage of the company.
In order to try and enumerate on the power of multi-successive 1 -2 impulse waves as was evidenced by FNTN over an 18 month period, it should be understood that the Dow Jones in its ascent from 1000 to 3000 over some 8 years was a larger Elliot Wave 1 structure that was made up of numerous 1-2 minor structures over the many months and years from 1982 to 1990. The Third wave of the DJIA, which by my way of reckoning we are still in, began on January 16, 1991, with a breakaway gap caused by the opening day of the Gulf War and at that time was the largest opening gap in the history of the Dow, at up 70 points.
By coincidence in comparison to FNTN, the Dow's low at around 2344 actually occurred on October 11 and the last wave one impulse occurring immediately thereafter. The December January pullback provided the retest and set-up for a third wave launch as did FNTN's drop.
The intensive preparatory activity that played out continuously throughout the 80's, including the giant 1 - 2 of 1987 and the subsequent 1 - 2 of the 1990 Gulf War correction, provided a really tremendous platform for the greatest bull market in all of history to unfold.
Last night, I alluded to the fact that the technical structure at this time in FNTN resembles an extremely potent looking extended base formation punctuated by a series of increasingly dynamic 1 - 2 waves and wavelets, that conceivably have laid the foundations for a 3rd wave of some degree and consequence to unfold and eyeballing this alone, is enough to get any red blooded technician's blood flowing. As I said last night, it's not every day that the market charts its course so potentially clearly and vividly ahead of time, one can almost embrace it.
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COPYRIGHT NOTICE
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Copyright 1999, Financial Intelligence. All rights reserved. Re-publication and/or re-dissemination, through electronic mail or any form of mass distribution, including posting to news organizations or message boards, is expressly prohibited without the prior written consent of Financial Intelligence.
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