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The New-High Growth Momentum Strategy buys leading stocks with fast-growing quarterly earnings when they break to new highs after a pullback. It requires both earnings and price strength, and turns William O'Neil's CAN SLIM principles into rules.
Born in 1933 in Oklahoma and raised in Texas. After graduating from Southern Methodist University and serving in the Air Force, he started as a stockbroker at Hayden, Stone in 1958.
In 1963, at 30, he became the youngest person at the time to buy a seat on the New York Stock Exchange, and founded the research firm William O'Neil + Co. the same year. The firm supplied stock data to institutional investors, and in 1984 he launched the newspaper Investor's Daily, later Investor's Business Daily (IBD).
He studied hundreds of the biggest winning stocks since the late 1800s to find what they had in common just before their big moves, and summed it up as the seven CAN SLIM conditions. The result was not what most people expect. Most big winners started their run near new highs, not near lows, and their quarterly earnings were already growing fast.
His best-known book is How to Make Money in Stocks (1988). He died in 2023.
Net income in the latest quarter should be at least 25% higher than the same quarter a year earlier. Rising sales help too.
Not just one good quarter; annual growth of around 25% should continue.
A new product, new management or an industry change, and a price close to its 52-week high. O'Neil concluded that a price that looks too high is often where the move begins.
Volume on the breakout day should be at least 40 to 50% above average. A new high without volume is suspect.
Buy only stocks ranked first or second in relative strength within their industry. A cheap-looking number two rises less and falls more.
Signs of funds and institutions accumulating shares, such as a rising number of holders, are needed for the move to last.
His data showed that when the whole market falls, three out of four stocks fall with it, however good they are. Buy new positions only when the index is in an uptrend.
A chart pattern named by O'Neil. A stock that has risen sharply pulls back in a cup shape over weeks or months, forms a shallow handle at the end, and the buy point is the break above the top of the handle.
If the price falls 7 to 8% below the purchase price, sell without asking why. Take some profits in the 20 to 25% range, but hold longer when a stock rises more than 20% within a few weeks of the breakout.
The stop is 7 to 8% because his data showed that sound breakouts rarely fall that far below the buy point. The stop price tells you that the call was wrong.
This strategy model was independently built by Confluence Zone to quantify the investment philosophy in the works above. It is not an official model created, endorsed or reviewed by William O'Neil or any related institution. Last reviewed: 2026-09-29
Related terms: Trading Volume · Moving Average · ROE
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