The midfielder spent time with his first club, Motherwell, in the summer but has failed to secure a contract since being released by Everton in the summer.
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He told reporters: "James has trained with us and I think he's done well. I'll have a proper word with him this week."
O'Neill is also keen to allow some of his fringe players to leave the club temporarily, in order for them to gain first-team experience, after Danny Rose's succesful loan move to the Stadium of Light from Tottenham.
"In the past going out on loan might have had a stigma to it, now that's far from the case," the 60-year-old continued.
"We've taken Danny on loan here and had he been down at Spurs he wouldn't have been in their starting line up, so it's a great opportunity for him. That should be the way the players look at it.
"I'm all for loaning players out. We don't have a massive squad but I could stagger those loans so you don't have a big group out at the same time."