Setups › 52-week-high breakout

52-week-high breakout

From William O'Neil. In one line: closed above its 3-month high, within 5% of the 52-week high.

About the names. The famous names are credit for publicly described ideas. Every test here uses our own simplified, fully coded version of the idea, so the numbers show how our code behaved on past prices, not how the named person trades or traded. No affiliation with, or endorsement by, any named person.

5,443

trades tested

40%

win rate

-0.09R

average result

-0.14%

vs Nifty per trade

What it looks like

William O'Neil, founder of Investor's Business Daily, found that most of the biggest winners of the last century made new highs before their big moves. This setup is a stock closing at a new 3-month high while already near its 52-week high.

Why traders use it

A stock near its high has no overhead supply: few people bought higher and are waiting to sell at break-even. It is also a sign that someone is buying while others are not. "Buy low, sell high" feels natural; O'Neil's research said "buy high, sell higher" worked better for growth stocks.

The exact rule we tested

Today's close is above the highest high of the last 3 months (63 trading days).
The close is within 5% of the 52-week high.

Mistakes to avoid

Forgetting the rest of O'Neil's checklist. He also wanted strong earnings growth, a leading industry and a healthy market. The test above is only the chart part.
No stop. O'Neil's rule was to cut any loss at 7-8% from the buy price, without exceptions.
Breakouts in a weak market. In the November 2026 backtest, rule picks on BAD market days did clearly worse (see the results page for the latest numbers).

How we tested it

Every day from 05 Nov 2024 to 05 Nov 2026, every main-board NSE stock (price ≥ ₹50, turnover ≥ ₹5 crore a day) that showed this setup was bought the next day above its last high, with a stop 1.5 ATR below and a target 2.5 ATR above, and sold after 10 trading days if neither was hit; 0.1% costs per trade. Traders usually hold this setup 3-5 days.

The maths behind the result

Average winner +1.17R, average loser −0.93R, win rate 40%. Expectancy = 40% × 1.17 − 60% × 0.93 = -0.09R per trade. To break even with this payoff you need to win at least 44% of trades. How expectancy works.

A historical simulation, not live trading and not a recommendation.