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

by Gil Morales and Chris Kacher (2012)

Quick summary -- an in-depth PhD-level extended summary (10-30 pages) for this book is coming soon.

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

Executive Summary

Gil Morales and Chris Kacher, who achieved an 18,000% return using methods derived from William O'Neil's CAN SLIM methodology, present an advanced, exercise-driven guide to growth stock trading. The book goes beyond basic O'Neil principles to introduce proprietary techniques including Pocket Pivot buy points, Buyable Gap-Ups (BGUs), and the Seven-Week Rule, all tested in real market conditions.

Core Thesis

Successful growth stock investing requires developing a trained "chart eye" through intensive practice, embracing uncertainty, and mastering both the entry techniques and the psychological discipline to execute them. The authors argue that their refinements to the O'Neil method provide earlier, lower-risk entry points than traditional breakout buying.

Chapter-by-Chapter Summary

Introduction: Disciple Boot Camp

Introduces core concepts: Pocket Pivot Buy Points, Buyable Gap-Ups, Moving Average Violations, and the Seven-Week Rule. Sets the expectation that readers must actively participate through exercises.

Chapter 1: The OWL Ethos

Establishes the philosophy of Objective, Willing, and Learning (OWL) trading. Includes quick quizzes and chart exercises on identifying bases and the line of least resistance.

Chapter 2: Mind Games and Mazes

Addresses the psychology of trading: embracing uncertainty, follow-through day psychology, the necessity of losing to win, the danger of labels as heuristic shortcuts, and price bias.

Chapter 3: 2011 Postmortem

Detailed review of a difficult trading year, analyzing trade blotters, spreadsheet analysis with chart mark-ups, and lessons from three unsuccessful market swings.

Chapter 4: Developing Your "Chart Eye"

Covers X/Y-axis scaling, linear vs. logarithmic charts, bars vs. candles, moving average stress syndrome, indicator usefulness, intraday charts, and monitor formatting.

Chapters 5-6: Pocket Pivot and Buyable Gap-Up Exercises

Extensive practice sections with real chart examples to build pattern recognition skills.

Chapter 7: A Trading Simulation

Detailed walk-throughs of complete trades in First Solar (2007-2008) and Acme Packet (2010-2011).

Chapter 8: Frequently Asked Questions

Comprehensive Q&A covering pocket pivots, buyable gap-ups, stops, general selling rules, short-selling, and market timing model building.

Key Concepts

  1. Pocket Pivot Buy Points: Volume-based signals that identify institutional buying before traditional breakout points
  2. Buyable Gap-Ups (BGUs): Criteria for identifying and trading gap-up events that signal strong institutional demand
  3. Seven-Week Rule: A timing rule for managing positions relative to their base formation
  4. Chart Eye Development: The trained ability to read stock charts intuitively through extensive practice
  5. Moving Average Violations: Rules for when price action relative to key moving averages signals danger

Practical Applications

  • Identify pocket pivot buy points for earlier entry into leading growth stocks
  • Use BGU criteria to safely buy stocks gapping up on volume
  • Apply the Seven-Week Rule for position management
  • Develop chart reading skills through intensive exercise-based practice
  • Build market timing models for determining overall market direction

Critical Assessment

This is a serious, practitioner-level book that demands active engagement from readers. The exercise-based approach is genuinely valuable for developing intuitive chart reading skills. The strategies are well-documented with real examples. However, the book assumes familiarity with O'Neil's CAN SLIM methodology and may be overwhelming for beginners. The 18,000% return claim, while impressive, spans a multi-decade period.

Key Quotes

  • "To dare is to lose one's footing momentarily. To not dare is to lose oneself." - Soren Kierkegaard
  • "You Must Lose to Win"

Conclusion

"In the Trading Cockpit" is an invaluable resource for serious growth stock traders who want to advance beyond basic CAN SLIM methodology. Its exercise-driven format and real-world examples make it one of the most practical trading education books available.