Trade Like an O'Neil Disciple: How We Made 18,000% in the Stock Market

5.5. BUYING "IN THE POCKET"

Whether buying pocket pivots in the base or within an uptrend, pocket pivots should ideally occur after consolidation of some sort. Naturally, the length of consolidation of buying within a base will be longer than the length of buying within an uptrend, also known as continuation pocket pivots. That said, some of the strongest price performers may only rest long enough to hit their 10-day moving average briefly before bouncing higher on volume, which, if conditions we have discussed in this chapter are met, would qualify as a proper pocket pivot buy point. This presents the investor with a multitude of possible buy points to get on board top-performing stocks and enables investors to initiate a position in a leader even if they missed the initial base breakout.

To better understand the entire concept of "buying in the pocket," we will review a short Pocket Pivot Model Book of pocket pivots that occur within a stock's base and which often give investors an early entry point in a fundamentally sound, leading stock building a proper base during a bullish market backdrop. We will then discuss buying pocket pivots in an uptrend, or continuation pocket pivot points, in a subsequent section of this chapter.

In March of 2007, Nvidia Corp. (NVDA) was rounding out and coming up off the second low of a potential base formed in the first quarter of 2007. This base was roughly 30 percent deep, and along the lows the stock was picking up some big volume support, ...