When I was a prop trader, QCOM was going crazy. I remember my friend shorted it just before earnings and lost 6 points on it, covering at $241. He still says that was one of his best trades ever. Anyway, one guy in the office was shorting that thing (and losing) all the way up. He finally said to the guy who placed his orders, "Cover it man. I'm all done with that stock." Upon hearing this, one of the old salts that rented space there, turned on his heel, walked back to his office and made a trade. He shorted only a few hundred shares and made about 70 points the next day. The only reason I knew he did it was because (for some reason) I was given administrative access to everyone's blotter. He didn't gloat. I went and asked him about it a week later and he said that it was a pure gamble, but he figured that when the other guy finally covered around $670 it was a nice example of capitulation.
I checked my shelf and I have one two O'Neil books, but neither describes the "buy the good stocks/employ a trailing stop" strategy. I'm sure it's in one of those free books you get with an IBD subscription. I just read a section on identifying market bottoms.