William O'Neil's actual historical trades — Mosaic 581%, Schwab 300%+, Amgen 50×, Chrysler 300%, Syntex 450%, Netflix 750% — were analyzed bar-by-bar in IBD's Model Book video series. Mike Webster walked through each one in detail.
Six trades. Six massive winners. And across all of them, the same properties appear in the base before each breakout.
These are not screened examples or backtests. These are O'Neil's personal trades, documented in his own books and annotated by the people who worked with him.
Property 1: RS divergence before the price breaks
In every case, the stock's Relative Strength line showed something unusual before the breakout.
For Netflix, the RS line hit new all-time highs before Netflix's price hit new all-time highs. "O'Neil's first clue," Webster called it. The market was still weak; Netflix was outperforming.
For Schwab, while the NASDAQ was hitting two successive lows during the 1998 correction, Schwab was forming a higher low. "The biggest tell you'll ever see."
The pattern: when the market is weak, the winning stock shows strength. Its RS line diverges from the index — either making a new high while the index makes a new low, or simply holding up while everything else falls.
What this means practically: Build a watchlist during corrections. When the SET is making lower lows, run a scan for stocks making higher lows on the RS line. Those are the names ready to break out when the market recovers. This is the actionable application of the divergence signal.
Property 2: The bottom week of the base closes high in its range
For Mosaic, the bottom week of the base closed with a 93% closing range — meaning it closed near the very top of that week's high-low range. For Schwab, the bottom week closed at 47%.
Webster's threshold: closing range ≥40% on the bottom week = accumulation signal. Closing range <40% = distribution signal.
The calculation: (close − low) ÷ (high − low). A stock that closes at the top of its range on its worst week was being bought at the lows. Institutions were accumulating.
Volume on the bottom week also mattered: Mosaic's bottom week volume exceeded all other weeks in the base AND exceeded the prior week. Heavy volume at the worst price point = buyers absorbing the sell-off.
The diagnostic: Identify the week with the largest price decline in the base. Compute where the close was relative to that week's range. ≥40% = the base has real accumulation; <40% = sellers dominated, the base is weaker.
Property 3: Each base in a sequence is tighter than the prior one
For Mosaic, O'Neil bought the stock after multiple bases. The final cup-with-handle was roughly 10% deep. The prior double bottom was roughly 33% deep. Each pullback was shallower than the one before it.
This is the supply/demand interpretation: each successive base represents sellers gradually exhausting themselves. When the base gets very tight — 10% depth, or less — it means almost nobody left who wants to sell is doing so. The stock is coiling.
Watch for this in sequences: A stock that pulls back 30%, then 20%, then 10% is telling you supply is diminishing. A stock that pulls back 30%, then 30%, then 30% shows no compression — no accumulation trend.
Property 4: Most right-side weeks close near the weekly high
On the right side of every base (the recovery from the lows toward the pivot), most weeks closed at or near the weekly high. That means buying was strong enough to push the stock up through the week and keep it there.
Weeks that close at the bottom of their range on the right side — even if the stock went up — show intraday weakness. Buyers who pushed price up let it drift back before close. That's a sign of institutional distribution even on a rising day.
Right-side quality check: Look at the right half of the base. Are most weeks closing in the upper half of their range? If yes, buyers are in control. If you see consistent lower closes on up-weeks, treat the base as lower quality.
Property 5: A macro trigger resolved right before breakout
In Chrysler's case, the breakout happened October 29, 1962 — the day after the Cuban Missile Crisis resolved. The Dow had a follow-through day the same day. Chrysler launched immediately.
For Syntex, the follow-through day was July 30, 1963 — the base had already formed, the market resolved, and the stock launched.
Webster's principle: "Whenever there's some big issue — election, Fed move, key earnings — see what the reaction is right after it resolves. Which stocks are bouncing with the most strength?"
The timing insight: bases form during risk events. The breakout happens when risk is removed. Screen for strong RS stocks when the risk event resolves, not after you're already certain it's over.
What the combination looks like
All six winners had: 1. RS divergence (stock holds up or outperforms while market falls) 2. Bottom week closing range ≥40% (institutions absorbing at the lows) 3. Final base is the tightest in the sequence (supply exhausted) 4. Right-side weeks close near their weekly highs (buying pressure sustained) 5. Breakout triggered by macro resolution (fear removed)
None of these requires earnings to be spectacular at entry. O'Neil bought Mosaic when earnings "were NOT great." He bought on the chart; the fundamentals confirmed during the hold.
Thai market application
These properties are directly testable on Thai weekly data. The closing range diagnostic is straightforward: (close − low) ÷ (high − low) for the base's bottom week. The sequence-tightening test requires looking at the last 2-3 bases and measuring depth.
RS divergence during SET corrections is the highest-value filter for the Thai watchlist. Running a scan after each 5% SET decline for stocks with RS lines at or above prior highs gives the ready list. When the SET bounces with a Follow-Through Day, those stocks are the first entries.
The right-side close quality check explains why chart reading requires judgment: the scanner finds the shape; the human reads whether the closes show real buying or weak closes. This is why scanners are candidate-finders, not signal-generators.
Source: IBD Model Book Stock Review — Mike Webster analyzing O'Neil's actual trades in Mosaic (581%), Schwab (300%+), Amgen (50×), Chrysler (300%), Syntex (450%), Netflix (750%). Extracted and structured 2026-06-12. See also: [How to Read Breakout Volume](/articles/how-to-read-breakout-volume.html) · [The Three Exit Signals O'Neil Used to Hold 300% Winners](/articles/three-stage-exit-rule-rs-line.html)