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My Brothers in Sam Weiss, how cooked are we? 🙂
Burnt to a crisp baby!
Sam, what time frame for the recovery from bottom to peak? Rapid? Are the May 16 525/535 toast? Are you thinking 20%+ recovery or more of a 50% retracement?
Finally, QQQ now officially in bear market? What does that change?
Also, how high conviction do you have on capitulation and how far will that go down from here?
So I’ve answered a lot of this below.
(1) The QQQ is trading at a 25-RSI right now. That means it is very deeply oversold on the daily chart. The SPY is even worse than that at 24.5. Again, those are really near-term indicators. Near term in teh sense that they predict a rally is going to start really really soon. They’re also long-term indicators in that they often predict a multi-week rally.
(2) High conviction on capitulation because I’ve seen this exact trading action before. we’ve seen this. Down 4% two days in a row going into Friday after bad news. Monday, we get a gap-down followed by a rally. we have two big gaps now to fill.
(3) The $VIX is trading north of $40 and deeply overbought. That deeply overbought part is a super near-term indicator. Meaning, when we get that overbought on the $VIX it typically means we’re at the end.
I don’t know about the May call-spread until we get the rally. it depends on how explosive the rally is.
How far down with capitulation take us? $400?
This Is Not Capitulation — It’s Repricing
I
’ve read the case for a Monday bottom — VIX in the 40s, RSI oversold, NYMO stretched, QQQ down 20%. Classic signs of capitulation, some say. Maybe even a mirror of prior corrections where despair turns to recovery. But here’s the problem: this doesn’t feel like capitulation because it isn’t. It’s something else entirely — a structural repricing of risk.
Capitulation is emotional. It’s fast, irrational, and often disconnected from fundamentals. This selloff has been the opposite — mechanical, methodical, and absolutely justified. Margins are being reset by policy, not panic. Tariffs on China and Taiwan invasion are not headline noise; they are an economic regime change. Supply chains are being taxed. Demand from major global markets is deteriorating. That doesn’t reverse because the RSI hits 28.
VIX in the 40s isn’t capitulation — it’s fear, yes, but it’s rational fear. True capitulation means liquidations. Margin calls. Selling everything at once. That hasn’t happened. This market isn’t panicking — it’s repricing the future. A future with higher costs, slower growth, and no certainty that the AI boom will monetize fast enough to justify today’s multiples.
Yes, we may bounce — maybe Monday, maybe not. But if we do, the bounce will be sold. This isn’t 2018. It’s not even 2022. This time, it’s not about what traders feel — it’s about what the macro has become.
And that means this isn’t the bottom. It’s the middle.
The trade war is expanding, very quickly. That won’t be done repricing anytime soon.
Just my opinion.
Just so we’re clear. It would be sublime to be proven wrong.
Appreciate that we are discussing with more levelness than yesterday. It’s easier to digest your points this way.
I think what we’re missing is an actual strategy to get out of this scenario in the black. Even in a repricing, our current best tool of recovery remains to be the overbought and oversold cycles once we return to equilibrium.
But if you have any strategies of your own, perhaps we can learn from them.
Jesse,
If this is a structural repricing, then traditional oversold/overbought signals still have utility — but only as short-term tools, not recovery strategies. My focus has shifted toward a two-track approach (this is just some food for thought since you asked and since this is the Sam Weiss board I’ll keep it very brief)…
-Defensive optionality: Long-dated put spreads on globally exposed names (NVDA, AAPL, SMCI), funded by selling volatility on false bounces. I want exposure to the next leg down, but in a defined-risk way.
-Domestic rotation: Looking for value in U.S.-centric sectors that benefit from the new regime — think defense, heavy industry, regional infrastructure, ag. The goal is to find what fills the vacuum, not just what’s oversold.
Just my opinion.
Chris, there’s a thing called misplaced blame.
I’m very sorry that your recent investment didn’t work out the way you expected it. Chances are you took a risk and sustained very heavy losses.
It’s much easier to blame Trump’s tariffs, Sam’s expertise, economical downturns etc… for that trade. But it was you who made it. The sooner you take the responsibility for your own actions the faster you can process that loss and move on.
Cheers
I don’t blame anyone for my trades — I own my risk, always have. But what I won’t do is pretend we’re still playing by the same rules when the entire field has changed. This isn’t about a bad bet.
It’s about the fact that structural shocks are being dismissed as cycle noise, and people are using RSI charts to explain a macro upheaval.
If you think calling that out is “misplaced blame,” then you’re not listening — you’re moralizing. This isn’t therapy. It’s a market. And the market is being repriced, not just feared.
If I’m wrong, great — we bounce, we recover, the old models still work. But if I’m right, then this is just the beginning of a larger reckoning. I’d rather raise the flag early than stay silent and call it stoicism.
Cheers.
Chris –
Not trying to antagonize or anything but how can you have a high level of conviction when the negotiations on tariffs hasn’t even neared completion? In addition to that, the US market is one the largest consumer markets in the world that have a high level of discretionary income, and is one of the easiest to access as opposed to other markets such as the EU (i.e. high decentralized with many localization requirements), China (i.e. significant drop in consumer spending along with extremely difficult market to enter), India (i.e. huge market but still low levels of discretionary consumer income).
Wouldn’t you view this as sizable bargaining chip at the table for negotiations?
Again, not trying to antagonize, but merely to understand and have a different perspective into the market.
Mr. Meow
Fair question, and I appreciate the tone with curiosity not with claws. I’m not discounting the U.S. market’s importance — you’re absolutely right that it’s one of the most desirable and accessible consumer markets in the world. That is leverage. But the key question isn’t whether the U.S. has bargaining power — it’s whether this current administration actually wants to negotiate, or if it’s deliberately shifting the game board altogether.
My conviction doesn’t come from believing the tariffs are final — it comes from the recognition that the threat itself is the new baseline. Even if these tariffs get walked back or softened, they’ve already reintroduced risk premium to global growth models, and that risk doesn’t just disappear once a headline changes. Markets don’t only price what’s enacted — they price what’s now possible. And what’s now possible includes long-term fragmentation of supply chains, protectionist policy cycles, and capital flows redirecting inward.
So yes, there’s room for reversals — but the existence of that uncertainty itself undermines the stability that global megacaps like NVDA, AAPL, and TSLA were priced on. That’s the shift I’m talking about and seem to be observing.
Happy to be wrong — but until there’s a sign this is de-escalating, I treat it as the beginning of a regime change, not a tactic in a temporary game of brinkmanship.
Just my opinion.
Hey Sam, in hindsight would you have played this correction the same way? Should we have bought even more cautiously in the trading portfolios so we could DCA more effectively later? Or was it just bad luck with this one?
Trading works really well in normal conditions and normal corrections. But when you get larger corrections like we had here, it’s hard to come out unscathed. It’s easy to get caught. Especially when trading on near-term indicators. Hence why we’re heavily invested in long-term portfolios and why we’ve largely advocated being invested long-term.
Our long-term investment will do well. They’re doing well now. Arryn is still green 35% even despite the 20% drop. Our hedges in Arryn are up $24k. So a lot of that is the hedges working.
But as trading is concerned, corrections and how they unfold play a big role on how the trade portfolios end up performing.
As I mentioned before, I think the smarter move would have been to keep trading pegged to the individual long-term portfolios and I think going forward, that’s what we’re going to do. Just trade when it makes sense in the long-term portfolios. They’re already all well. hedged and will perform regardless of market direction.
I joined for the long-term, but got caught up in the trading myself. Feel good about the long-term investments.
Sam, I get the sense you’re feeling less conviction in the snapback rally?
No. Not at all. We’re just far from our targets. So we will likely see a 15%er now. It’s all size relevant. The larger the sell-off, the larger the snap-back rally.
But in terms of our spreads and targets, the window for exit is now very narrow.
When do you anticipate that 15%+ run happening and are the $525/535 MAY QQQ toast?
So it really depends on the scope of the rally. It really does. If the rally explodes higher like we saw after covid or after any of the moves we saw off the lows in November 2023 or August 2024, then we could recoup some value.
We need to see the scope of the rebound.
Edit: In terms of timing, we expect capitulation Monday and the rally start next week.
My basis is down to .45 on May 525/535 spread, but still feel like I was just throwing good money after bad. It really starting to look like the whole thing is toast as theta kicks in.
Didn’t we also get away from the trading strategy for Targaryen a bit?
I think you said in the beginning we would these trades on maybe 2x year during clear cut correction bottoms. So what we have now/maybe on Monday.
But we have traded a lot the last months which worked great until it didn’t I guess:)
Personally I would probably appreciate that concentrated approach more since it’s also much less time consuming. Just my view on it. And everybody just needs to be responsible for themselves about how much to allocate to which portfolio.
Sam I hope you will re-consider on continuing the short-term trading. Probably tag a warning or reminder that this constitutes a small portion & its high risk kinda trading everytime you come to this section in ur daily briefing.
I believe some like me will still dabble in short-term trades (responsibly) here & there.
Its better to do it following your trades rather than risking it elsewhere which is far more dangerous.
You made the most sense so far.
Just to be clear i am 90% in the long term.
The little portion short term trade is to spice up my investing journey a little bit ????
Sam I’m praying that you’re right, you have been in the past but this time just feels different
I am so glad I got out at 493 in slight profit. I thought I had sold early. Going to sit this one out. Will continue reading your updates, Sam. I hope everyone recovers their positions, but this is looking kind of whack.
There’s still some cash on the sidelines in the some of the portfolios, any plan to buy any more on Monday if it’s likely bottom?
Also, any concern regarding Tesla’s fundamentals?
We are going to be making a bunch of different moves in our long-term portoflios soon. We’re going to sell premium against our puts and add to long positions down here as the QQQ has a very high probability of a major rebound. So we’ll capitalize in our long-term portfolios.
Sam, I have always been wondering, when you buy long term option contract. What would be the difference in buying different strike price ? For example, QQQ (now trading at 430) is at 78$ at 450 and 55$ at 500 right now. What’s your strategy in determine a good price contract ?
well not sure what expiration date you mean. But if we launched a new portfolio here, we’d probably be looking at the January 2027 and when we make determinations we’re thinking about where we believe the QQQ will trade come 2027.
So right now, our target would be $600 on the QQQ when looking out deep into the future (2027 and beyond). So when buying a QQQ call, we’re basing that decision on the expectation of the QQQ rallying to $600 a share. That’s how we determine what to buy.
Also, we consider the amount of intrinsic value relative to volatility. That matters. So for example, the QQQ JUNE 2027 $400 calls are at around $92.00 which means it has about $28 of intrinsic value and $64 in premium. On a rally to $600 in the next 2-years, that position doubles in value. At $600, it’s worth $200. With a $92 purchase price, that’s a 117% return. So that’s how we look at it when making purchases.
What makes you so sure the bottom will be Monday as opposed to the other times the market was supposed to bottom? QQQ was oversold on the daily last month too but that didn’t lead to a bottom
(and to be clear, this question is coming from a place of fear and anxiety, hoping for reassurance. I’m not trying to be like “gotcha, you were wrong before!”)
My interpretation would be that because VIX is substantially higher, coupled with the two daily RSI < 30 occurrences in close proximity, that bottom conditions are becoming more certain
So when I say bottom, I don’t mean the market will bottom for good. That the entire corrections ended or anything like that. I probably need to clarify that.
What I’m saying is the market will likely capitulate and then start a major rally. That rally could be correction ending or it could be just a major rebound ahead of another leg lower.
Notice that last month we did get a big rebound. It was on the smaller end of the spectrum for 30-RSI rallies that are generally 10-15%. If you look at the 30-RSI table, it was on the smaller side, but it did rebound something like 7%. That has happened before, and generally when it does happen, the second time the QQQ reaches oversold, it does rebound aggressively.
You can see that on the chart itself. Whenever the QQQ hits a 30-RSI, has a smaller rebound of only 7% like we had and then sustain another leg lower reaching 30 again, the next time the rebound is always explosive. We have no exceptions to that rule. Every time the QQQ has followed this path — two instances of 30-RSI in close success — the rebound has been significant (12-15%+)
So again, this is a 2nd instance of oversold. The first instance went for 7% rebound (small). Historically when that has happened, the 2nd instance leads to an in-line rally or greater (12-15%).
So what are we expecting here? At least a rally of something like $60-$70 on the QQQ over a few weeks. Much like the rally we saw in August 2024 or November 2023. both rallies were 15%.
Expect this time we have an even larger correction at 21% and when you look at the corrections able, 21% moves to the downside like this usually lead to 20% rebounds. Go check it.
Why Monday?
As we explained, we’re oversold on the daily. We’re at the turn of the month (typical for bottoms). The $VIX has opened way above its upper b-band and is trading in the 40’s. More importantly, the $VIX is deeply overbought and likely closing way above its upper b-band. The S&P 500 has opened and will likely close below its lower b-band. Very rare and often happens at bottoms.
Finally, the overall doomsday sentiment everyone is feeling right now tells me that on Monday morning, after a full weekend of festering negativity, the market is going to bottom.
Wow even $70 rally won’t get us to $500 though
Thanks! Yeah I don’t expect the next rally to be the end of the correction. But it’s been tough waiting for the rally to happen.
Do you have a rough estimate on how much you expect NVDA to rally? A 20% NVDA rally brings it back to…where it was EOD April 2 which is still a long way down from when the correction started
Hello Sam, What would the price of NVDL be if it were bought back on Monday at $25 if NVIDIA recovers to $120 and $140? I did the exercise for the decline in April 2024 and the rally in June 2024, and I don’t get a 2x increase, but a 6x increase!
Targets 2x the daily gains of NVDA
It’s impossible to tell since it rebalances daily, and also isn’t always exactly 2x NVDA (sometimes it can be more one day and less another day)
If NVDA goes to 80 (I hope not) before it goes back to 120, you’ll have less of an increase than if it goes straight to 120 tomorrow
Do you even see a relief rally getting back to recent $493 high? Today is brutal. QQQ now trading below 426. If capitulation hasn’t even happened yet and we are expecting even more downside at Monday’s open, then even a 20% recovery might not get us past recent $493 highs it would seem
Look at the bright side, those QQQ spreads lost everything. Only up from here! Do we know how to have fun or what??!
I am down to .45 on the 525/535 and it’s not even looking likely that those win.
You know what, we should allow ourselves a little fun from all this anxiety and chaos!
“If the QQQ rallies as we expect, we’ll then reduce down our $430 QQQ calls by selling calls against to free up premium and then we’ll use that premium to buy puts. W e’ll also cover the $400 July puts.”
What’s the alternative @Sam? Just keep plunging and relief rally is delayed?
There’s no real alternative. I just use the conditional “if” because we’re talking about the future. It’s a language quirk.
The market is going to rally. It is literally intrinsic to the market. Every sell-off like this has a corresponding rally. They go hand in hand. Even today intraday you can see we move up and down. The QQQ is back above $431 after having fallen to $423.
There’s two sides to the market and that will always be the case. There will always be people on the sidelines that view this opportunistically. Because it really is an insane opportunity. The market doesn’t give you 20% down all that often. we’re going to get a massive rally just because of that alone. everyone out there on the sidelines viewing this as a huge opportunity will drive markets higher in the near term.
When we rebound from $423 to $431, that’s what that is. It’s literally buyers stepping in and taking the opposite side of the selloff.
Chances are we rally 20% inline with the other recent cases of the market crashing like this.
in August 2024, the QQQ rebounded $62 after only falling 16%. It went from $422 to $485 in just 2.5 weeks time.
This selloff is much much larger than August 2024.
“In all 47 previous corrections, 47 previous people made those arguments and all 47 were wrong. They presented their arguments and reasoning. Their reasoning was probably sound and appeared very strong.”
And Chris is our 48th.
Just messing with you, Chris. Easy target. Hope you come out alright.
Chris isn’t the only one making those arguments. I’ve seen plenty of people come onto CNBC to make arguments of that kind. It’s par for the course. It happens in every big sell-off. The larger selloff, the more those arguments will appear and the more they intensify.
It will drown out everything else.
Sam,
I truly look forward to your being proven right once again.
No offense taken. My hedges are in place. Unwinding.
Hi Sam, any thoughts on the outperformance of bitcoin relative to the market? Could bitcoin finally start becoming digital gold?
Sam, just want to say thank you for your guidance and hard work during this challenging period. Hope you get some rest over the weekend.
Hey Sam, how do you look at the $NYMO? I use TradingView but I’m not sure if my indicator is the same as what you’re using. Mine says that the NYMO closed at -54, but I don’t think that’s correct since you said it was trading at -63 earlier in the day.
I use ratio adjusted $NYMO in thinkorswim intraday and have it set in stock charts. It closed at -59.992 according to thinkorswim and -59.68 according to stock charts. So both really close.
For the trading portfolio, at this point to you still think that the July expirations are optimal or August would be better?
Hello Sam,
Are you ok with this ?
Already a few positive articles surfacing…
If this bottoms Monday (tomorrow), how many legs are we calling this?
There are clearly two legs in this correction. I mean it’s very clear cut
We had one leg that went from 5:40 to 465
One rebound up to 493
Second leg down from 493 to 422.
Both legs are pretty much identical, which means the correction so far as textbook.
The selling and the second leg down is so severe that I don’t think there’s a strong possibility that we only have two legs in this correction
There’s a very high probability that we get at least a retest of the lows after a big rebound or we get a third leg down.
Thanks and since you don’t believe this is the full bottom, in terms of exiting positions, are you targeting 50% retracement of this leg?
I guess I am just looking for clarity on the last update posted and what to expect as we navigate the week ahead.
You highlighted some massive rally’s, but are you saying those might start down the road given there is an expected 3rd leg down, or are you saying because we hit 20s on the daily RSI, there is going to be a massive v shaped recovery ~15%, then there will be a 3rd leg down to either retest or make new incremental lows?
But I guess the question is, because the daily was so deeply oversold are you expecting we see something closer to 15% taking us to the 480-490 range before another leg lower? Is that what you’re referring to as the v shaped recover?
Edit button gone: is it common, for the rally of the 2nd leg to ever surpass the high of the rally from the 1st leg? That would look like $540->465->$493(6%)->422->$506(20%)->3rd leg lower
So we really won’t know. We’ve seen retracements go far far past 50% and still lend up with a third leg that falls short of the lows.
I think we could easily see that happen here. A 70% retracement and then a third leg that falls short of the lows.
With the QQQ coming up upon $400, I think we’re bottoming out here. At $400, it’s a 26% correction which puts it among the biggest we’ve seen in the last 15-years.
you really see a rebound happening early this week? looming brutal right now
Yes. We ‘re capitulating tomorrow. The market will now be extremely oversold. So it’s a major bottom tomorrow.
We’re going to be making a list of different trades quickly in the long-term portfolios.
Tomorrow would warrant the launch of a portfolio, but this is already the Stark/Frey era.
Still, tomorrow is a major bottom.
Anyone buying anything tomorrow will be set big time. Most likely we’ll recover all of last weeks losses in a very short period of time which will open up a major hedging opportunity. But overall, I’m fairly confident tomorrow will represent a major capitulation for the market.
And even if that ends up being wrong, we’re still right near the lows now. This is very similar to Covid in scope now. Not nearly as big, but getting there.
straight back to $480?
warrant a launch of new portfolio
are we expecting something like a long-term vertical spread model portfolio soon? 🙂
More positive news surfacing
where?
Trade talks underway with 50 counties, NVDA CEO met with Trump, EU wants to unite and then negotiate, Taiwan will not retaliate wants to negotiate
Elon is leaving because he doesn’t agree with the tariffs and got overruled. The man convinced Trump annexing Greenland and Canada of being great ideas but couldn’t change his mind on this policy lever. My hopes aren’t exactly high.
What are talking about??????????
so futures tanked! inline with what Sam said. More negative news over the weekend! are we still on track for Capitulation tomorrow, Sam?
I know Sam doesn’t like pre market stuff, but I’m assuming he’s watching and going to type something up tonight. This definitely warrants it.