Trade Like an O'Neil Disciple

GIL MORALES is the author and publisher of www.GilmoReport.com; coauthor and publisher of www.VirtueOfSelfishInvesting.com; a former proprietary internal Portfolio Manager and Chief Market Strategist for William O'Neil + Company; and is currently a Managing Director of MoKa Investors, LLC. He also co-authored, with William J. O'Neil, the Wiley title, How to Make Money Selling Stocks Short. Mr. Morales received his BA in economics from Stanford University. CHRIS KACHER is a frequent contributor to www.GilmoReport.com; coauthor and publisher of www.VirtueOfSelfishInvesting.com; a former research analyst and proprietary internal Portfolio Manager for William O'Neil + Company; and a Managing Director of MoKa Investors, LLC. He received his BS in chemistry and PhD in nuclear physics from the University of California at Berkeley.

• Foreword xiPreface xiiiAcknowledgments xviiChapter 1 The Evolution of Excellence: The O’Neil Trading Method 1Preparation, Study, and Practice 2Buy Expensive—Not Cheap—Stocks 4Averaging Down 5Cutting Losses Quickly 5Taking Profits Too Soon—Letting Your Winners Run 6Position Concentration 7Dealing in Big Stocks and Institutional Sponsorship 8Chart Patterns 9Pivotal Points versus Pivot Points 12Timing the Market: When to Be In, When to Be Out 13Emotions and Predictions 14Listening to Opinions, News, and Tips 15Overtrading 16The O’Neil Approach: Techno-Fundamentalism 17Conclusion 17Chapter 2 How Chris Kacher Made Over 18,000 Percent in the Stock Market Over Seven Years 19Gaining a Foothold in the Business 201996—“Y2K” Stocks Put Me Over the Top 221997—Keeping Profits during the Asian Contagion 271998—Demoralization Sets In Just Before the Market Takes Off 291999—The Bubble Expands 312000—The Bubble Bursts 352001—A Lesson in Shorting 372002 to Present—Choppy, Sideways Markets and the Birth of the Pocket Pivot 39Chapter 3 How Gil Morales Made Over 11,000 Percent in the Stock Market 43A Rocky Start Turns Golden 44Climbing on Board the Rocket Ride 46Joining the 1,000 Percent Club 49Oracle Bubbles Up 50Patience and a Watchful Eye 53Cleared for Take-Off 54Verisign: The “Spice in the Soup” 56Sitting Not Thinking 60Closing In on the Top 62The Theme of Success 64The Secret Ingredients 65Chapter 4 Failing Forward 67The Psychology of Success Lies in Taming the Ego 68Learning from Our Mistakes 72Problems, Situations, and Solutions 107Conclusion 125Chapter 5 Tricks of the Trade 127Dr. K’s Laboratory: The Pocket Pivot Advantage 128Characteristics of Pocket Pivots 131Definition of a Pocket Pivot Buy Point 132Pocket Pivots and Standard Breakout Buy Points 133Buying “in the Pocket” 136Bottom-Fishing with Pocket Pivots 149Continuation Pocket Pivots: Using the 10-Day Moving Average 153Improper or “Do Not Buy” Pocket Pivot Points 157Using Moving Averages as Sell Guides 163Dr. K’s Laboratory: Buying Gap-Ups in Leading Stocks 165Selling Techniques Using the 10-Day and 50-Day Moving Averages 173Putting It All Together 177Conclusion 185Chapter 6 Riding the Bear Wave: Timely Tools for Selling Stocks Short 186The Golden Rules of Short-Selling 187Short-Sale Set-Ups 192Shorting Rocket Stocks 221Conclusion 224Chapter 7 Dr. K’s Market Direction Model 226Timing the Market 226Chart Examples 234Stealing the Model’s Secrets 243Timing Model FAQ 244Conclusion 259Chapter 8 Our Bill of Commandments 260Misconceptions 260Surviving by Keeping Ego in Check 263The First Commandment 265The Second Commandment 265The Third Commandment 267The Fourth Commandment 267The Fifth Commandment 267The Sixth Commandment 268The Seventh Commandment 268The Eighth Commandment 268The Ninth Commandment 269The Tenth Commandment 269Conclusion 270Chapter 9 In the Trenches with Bill O’Neil 2721997–1998 2721999–2000 286The Great Bear of 2001–2002 3072003–2005 Bull Market 318Conclusion 329Chapter 10 Trading Is Life; Life Is Trading 331Ed Seykota: Teaching a Technique That Has Helped Traders around the World 332Eckhart Tolle: Helping People Achieve Inner Peace andGreater Fulfillment, a Prerequisite to Optimized Trading and Living 334Esther Hicks: Teacher of the Law of Attraction 340Jack Canfield: Seminal Works on Personal Optimization 341Psychological Checklist: Questions to Ask Yourself 343Parallels between Teachings 345In Conclusion 346Appendix Dr. K’s Top 50 Wall Street Books 347About the Authors 351Index 353