The OWL Handbook by Gil Morales instant download

The OWL Handbook by Gil Morales instant download

Capitalizing on big and relatively rapid price moves is a basic tenet of the OWL ethos. One
must deeply internalize the basic market law of physics that strength begets strength, for
example, a body in motion remains a body in motion, and once the line of least resistance
is penetrated the physics of a sharp price move are set in motion. Being able to recognize
where these lines may lie, as well as when they have been decisively penetrated, is critical.
Such moves provide a very strong signal to act and make the trade, whether long or
short, depending on the direction in which the line of least resistance is broken.
Most investors, when seeing a stock move decisively in one direction, tend to fall
into a reversion-to-the-mean mentality in that they think the movement is excessive and
that the stock must surely pull back. But if they have no impetus to act, they can just as
often be left behind. We find that pocket pivot buy points and buyable gap‐ups are often
associated with penetrations of the line of least resistance, and therefore provide ready
tools with which to approach the task of capitalizing on such tasks.
The predisposition we bring to the market has a great influence on how we perceive
the price/volume action we are looking at in real time. A break through the line of least resistance
on the upside can look to some like a stock that has gone too far, too fast, while to
us the potential for the stock to begin a serious, accelerated move to the upside is evident
once it is in the clear. It is truly a matter of being able to see things a certain way and to
react to the information at hand in real time, in a manner that conforms to the OWL ethos.