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

1.9. PIVOTAL POINTS VERSUS PIVOT POINTS

Buying at the exact right point is a key mechanic in the O'Neil methodology, and O'Neil's concept of a "pivot point" is drawn from Livermore's "pivotal point," of which Livermore had a "reversal pivotal point" and a "continuation pivotal point." We might consider O'Neil's pivot point buy points in stocks, generally defined by breakouts to new price highs, as more in keeping with Livermore's concept of a "continuation pivot point," whereas O'Neil's concept of a "follow-through day" as confirming an upturn in the market after a prior correction or bear market to be similar to Livermore's "reversal pivotal point" since it indicates a reversal in the market's trend from bear to bull phase. In How to Trade in Stocks by Jesse Livermore and How to Make Money in Stocks by William O'Neil, both writers share a common regard for such a "pivot" or "pivotal" buy point as the exact point where the risk/reward equation is most in the investor's favor, where the ducks are lined up in a row, so to speak, and so the stock should be bought once the price reaches this key pivot/pivotal point.

Waiting for the pivotal point to present itself requires patience, and Livermore would do his best to avoid taking action until and unless the correct pivotal point signal was given, because this assured his success, as he puts it, "Whenever I had the patience to wait for the market to arrive at what I call a 'Pivotal Point' before I started to trade, I have always made ...