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

CHAPTER 5

Pocket Pivot Exercises

The primary purpose of this chapter is to convey to your eye why these patterns work and train your eye to spot worthy pocket pivot buy points as they occur on a daily chart. The chapter includes 40 pocket pivot exercises that require you to identify the relevant pocket pivot buy points within the pattern. Try to distinguish between those that are in a proper buy position and those that are not or that may be flawed.

As you work through the exercises, keep in mind that pocket pivots should generally occur within constructive price/volume consolidations or uptrends when there is relatively low volatility in the pattern, perhaps a tight sideways consolidation, or a consolidation into a moving average. Within a base or consolidation the price bars may be gently sloping downward. Within an existing uptrend in the case of continuation pocket pivots, the stock should be exhibiting a coherent upward trending movement that is contained along either the 10-day or 50-day moving average. If there is any volatility within the pattern, it can still be constructive if one observes a pocket pivot that is also an upside reversal pattern occurring on very strong upside volume.

Each exercise consists of a full-page daily chart on a right-facing page with the answer concealed on the flip side of the page. Use a pencil to identify the pocket pivots and add any comments or qualifications. Once you are satisfied with your analysis of the chart, turn the page to read ...