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

3.8. SITTING NOT THINKING

At this point I more or less let the trend run its course as Verisign climbed higher, hugging its 10-day moving average all the way up until it made a sharp move higher up toward the 140 price level as we see in Figure 3.14, a daily chart of Verisign showing the insane move from a split-adjusted $60 at the initial breakout to over $200 in two months! While Verisign held its 10-day moving average throughout its uptrend, and not that in some strongly acting stocks it is possible to consistently add bits to your position as the stock trends up along the 10-day line, it did have one short "spin out" that occurred after the stock rapidly ran up from just below 100 to 140, a move of over 40 percent, in five days. Note the reversal off the 140 price level, which occurs on less than average weekly volume. Given that Verisign had started its move at 60, it was logical that this sort of short-term climax type of move would result in at least what Livermore would call a "normal reaction" and pullback. Perhaps most investors would have considered a move from 60 to 140 as "enough" and thereby taken their profits, not wanting to be pigs. The situation here was not that Verisign had gone up "enough," but that it had done so in only about five weeks, and I was still holding the stock based on the eight-week rule for stocks that go up 20 percent in three weeks or less of breaking out! My rules said that the stock had to be held until at least year-end; to be, for lack ...