O’Neil’s Price‑Growth Rules
William J. O’Neil’s time‑tested stock criteria are back in circulation online — key points include targeting companies with 25%+ earnings growth, high Relative Strength ratings, and strict loss‑cut rules around 7–8%. Traders are sharing these rules as a framework for finding high‑momentum names while protecting capital. (x.com)
A stock can report great numbers and still be a bad buy if the price is already rolling over. William J. O’Neil built his rules around that problem: buy companies with fast growth, but only when the stock itself is acting stronger than most of the market. (investors.com) O’Neil was a broker who later founded Investor’s Business Daily, and his best-known framework is called CAN SLIM. The letters stand for current earnings, annual earnings, something new at the company, supply and demand in the stock, leader not laggard, institutional sponsorship, and market direction. (aaii.com) The rule people keep reposting starts with earnings per share growth of at least 25% in the most recent quarter. Investor’s Business Daily still teaches that 25% is the minimum benchmark, and says the biggest winners often show 50% to 100% gains or more. (investors.com) It does not stop at one hot quarter. O’Neil’s annual earnings rule looks for several years of growth, because one lucky quarter can come from a tax benefit or a one-time contract, while a three-year record is harder to fake. (traderlion.com) Then comes Relative Strength, which is O’Neil’s way of asking a simple question: if the market were a race, is this stock near the front of the pack. Investor’s Business Daily says a Relative Strength Rating of 80 means the stock has outperformed 80% of stocks on price performance over the last 12 months. (investors.com) That filter changes what kind of stock you end up buying. Instead of hunting for “cheap” names that keep getting cheaper, O’Neil wanted leaders in top industry groups, with Relative Strength ratings of 80 or higher and price lines pushing toward new highs. (investors.com) He also cared about timing, not just quality. Investor’s Business Daily teaches that a proper breakout should come with trading volume at least 40% to 50% above normal, because heavy volume suggests large institutions are buying, and institutions are the only players big enough to drive long runs. (investors.com) The most famous O’Neil rule is the harsh one: sell if the stock falls 7% to 8% below your purchase price. Investor’s Business Daily says that rule came from studies covering more than 130 years of market history, and the idea is to keep one mistake from turning into a portfolio-sized wound. (investors.com) That loss rule is the reason traders still share O’Neil clips in 2026. A strategy that buys fast-growing stocks can be brutally wrong when momentum breaks, so the 7% to 8% stop is the seat belt that makes the rest of the system usable. (investors.com) The last piece is the one people skip when they repost the checklist: market direction. O’Neil’s system says even strong stocks fail more often in a market correction, which is why Investor’s Business Daily tells readers to get aggressive in a confirmed uptrend and cut exposure when the broader market weakens. (investors.com) So the full logic is tighter than the viral version. Find a company growing earnings at 25% or more, make sure the stock is already beating at least 80% of the market, wait for real buying pressure, and get out fast if the trade is wrong by 7% or 8%. (investors.com)
