Trade Like an O'Neil Disciple: How We Made 18,000% in the Stock Market

3.3. JOINING THE 1,000 PERCENT CLUB

When you hear about the great "dot-com bubble market" of 1999 you get the idea that it was just one big, year-long party for stock investors. Nothing could be further from the truth. As Figure 3.5 shows, the first nine months of the year saw the NASDAQ Index chop and slop its way higher in a slow, grinding rally that took the market to new highs in early October 1999. During these difficult months of 1999, the NASDAQ would consistently make new highs and then promptly roll over again. It was very difficult to make progress, and every time a stock began to work it would just as quickly reverse course and shake you out. By mid-October of 1999, the market was not looking all that promising.

While the NASDAQ was at least floundering its way higher in broken stair-step fashion, the Dow Jones Industrials were, by September 1999, making lower lows as they struggled to hold their 200-day moving average in October 1999, as Figure 3.6 reveals. Both Chris Kacher and I had our share of difficulties during that whipsaw environment, and it would be an understatement to say that we had become fairly exasperated with the market by that point. Because of this our tendency was to think that it was likely headed lower. Given the level of frustration we were experiencing as we had been whipsawed to death since early February, it was not hard to take a discouraged point of view. However, if you compare the chart of the NASDAQ (Figure 3.5) to that of the Dow Jones ...