In The Trading Cockpit with the ONeil Disciples: Strategies that Made Us 18,000% in the Stock Market

Praise for In the Trading Cockpit . . .

"Morales and Kacher want you to see an alternative to popularand traditional dead end strategies (i.e., buy and hope). Absorbthe insights of In the Trading Cockpit with the O′NeilDisciples and put yourself in position to thinkdifferently and profit."
Michael W. Covel, Bestselling author of TrendFollowing and The Complete TurtleTrader; President,Trend Following

Your hands–on guide to mastering powerful trading methodsinspired by stock market legend William O′Neil

Written by two former William O′Neil + Co. employees who havespent years building upon the lessons they learned workingalongside the master, this book delivers powerful tradingtechniques based on the O′Neil model that you can put to work inyour own portfolio, right away.

The follow–up to their bestselling Trade Like an O′NeilDisciple, In the Trading Cockpit with the O′NeilDisciples goes beyond the descriptive narrative of the formerbook to provide you with step–by–step guidance and all the practiceyou need to quickly master those tried–and–true methods and makethem an integral part of your trading system.

You′ll find:

Clear, step–by–step explanations of powerful new tradingstrategies, including techniques for buying pocket pivots andgap–ups Hundreds of annotated examples with charts ofreal–life trades from the authors′ own experiences with detailedanalysis of what worked, what didn′t, and why Set ups with buy, add, and sell points for both winning andlosing scenarios Dozens of skill–building exercises that help you quickly masterthe techniques described Tried–and–true stock shorting techniques based on WilliamO′Neil′s methods

Written by established experts Gil Morales and Dr. Chris Kacher,In the Trading Cockpit with the O′Neil Disciples is anindispensable guide to mastering proven strategies for tradingstocks for record profits in every market environment.

Acknowledgments xiii

Introduction xv

Disciple Boot Camp xvii

Pocket Pivot Buy Points xviii

Buyable Gap?]Ups xxi

Moving Average Violations xxiv

The Seven–Week Rule xxv

As You Begin xxvi

Chapter 1 The OWL Ethos 1

Quick Quiz 2

Chart Exercises 7

Identifying Bases 7

The Line of Least Resistance 9

Answers to Quick Quiz 14

Answers to Chart Exercises 19

Identifying Bases 19

The Line of Least Resistance 24

Summary 32

Chapter 2 Mind Games and Mazes 33

Embracing Uncertainty 33

The Psychology of Follow–Through Days 34

Lockheed–Martin: An Opportunity Derived from Uncertainty 37

Silver: A Crystalline Trend amid the Uncertain and Murky Watersof 2011 40

The Uncertainty of Company Earnings Announcements 42

You Must Lose to Win 44

The Need for Labels as a Heuristic Achilles Heel 46

Price Bias 48

Find Experts You Can Learn From, Not Have to Rely On 51

Paper Trading versus Real Trading 52

Awareness and Preparation 53

In Summary: Know Thyself 56

Chapter 3 2011: A Postmortem for the New Millennium59

Reviewing the 2011 Trade Blotter 62

Using Spreadsheet Analysis with Chart Mark–Ups 63

Three Swings, Three Strikes 64

The Window of Opportunity Has a Silver Lining 68

More Roads to Nowhere in 2011 74

Summarizing the Lessons of 2011 80

Chapter 4 Developing Your Chart Eye 85

What Is a Chart Eye? 86

The Visual Effect of X– and Y–axis Scaling 88

Linear versus Logarithmic Charts 90

Bars or Candles? 92

Moving Average Stress Syndrome (MASS) 95

Indicators: Useful or Useless? 102

Are Intraday Charts Useful? 105

Monitor Color and Formatting Schemes 108

What You See Is What You Get 111

Chapter 5 Pocket Pivot Exercises 113

Conclusion 195

Chapter 6 Buyable Gap–Up Exercises 197

Conclusion 263

Chapter 7 A Trading Simulation 265

First Solar (FSLR) 2007 2008 266

Acme Packet (APKT) 2010 2011 318

Conclusion 340

Chapter 8 Frequently Asked Questions 341

Pocket Pivot Buy Points 341

Buyable Gap–Ups 354

Stops and General Selling Rules 355

General Topics 359

Short–Selling 367

Market Timing Model Building 370

Appendix List of Companies (with Ticker Symbols)

Referenced in the Book 375

About the Authors 379

Index 381

Gil Morales is a co–Managing Director and Chief PortfolioManager of MoKa Investors, LLC. He is the coauthor and publisher ofthe investment website, VirtueOfSelfishInvesting.com, as well asthe author and publisher of the Gilmo Report(www.gilmoreport.com), and was formerly a senior proprietaryportfolio manager for William O′Neil + Company, Inc. During histenure there, Gil also functioned as vice president and manager ofthe Institutional Services Group, responsible for advising morethan 500 of the world′s largest and most successful institutionalinvestors, including mutual funds, pension funds, hedge funds,trust companies, and banks. In 2004, Mr. Morales was appointedchief market strategist for William O′Neil + Co., Inc. andcoauthored with William J. O′Neil the short–selling treatise,How to Make Money Selling Stocks Short (Wiley). Between 1998and 2005, Morales achieved an audited return of 10,904% in hispersonal account, as verified by Rothstein Kass.

Chris Kacher, PhD, is coauthor and publisher ofwww.VirtueOfSelfishInvesting.com. His investment career began in1995 when he founded one of the first Internet–based stock advisoryservices. In 1996, he joined William O′Neil + Co., Inc. as aresearch associate before quickly being promoted to senior researchanalyst and senior proprietary portfolio manager for the firm in1997. From 1996 to 2002, Dr. Kacher achieved a verified return inhis personal account in excess of 18,000%, as verified by KPMG. Hereceived a BS in chemistry and PhD in nuclear physics from theUniversity of California at Berkeley, where he studied under NobelLaureate professor Glenn Seaborg and helped discover element 110 onthe Periodic Table of Elements and confirm element 106, which hisgroup named Seaborgium.