Samwise Quick Reference Handbook
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Sam, to be clear, you are suggesting that QQQ could run to $540 and beyond before pulling back?
Assuming my understanding is correct, what changed since we were expecting a pullback of 2-3% then 3-5% given how high it went with an immediate term top at ~$523.
Nothing has changed. I’m saying we’ve seen this type of thing before. we’ve seen this exact situation before. The QQQ back in December reached peak overbought conditions at $525. Similar to the overbought conditions we have right now. The QQQ pulled back a mere 8-points down to $517 before then running to $540. Of course after that it then dropped all the way to $500 a share in an 8% correction.
The point is that we could see a smaller than expected pull-back and a repeat of Dec 2024. I don’t think it’s a particularly high probability, but the market has shown that it’s totally possible.
I see, and NVDA is due any moment for 10 pts. Nice.
What is target for NVDA this summer? KISS $150 and pullback, or run to $170?
This summer is now around the corner so I don’t know. For now the focus is 150. A return back to the highs. After that, it may make a move up to 170 by January.
Hi Sam,
What are your thoughts on our entry plan back into our NVDA July spreads?
Based on what I’ve learned from this newsletter and history with NVDA my initial gut reaction is to just wait for deeply oversold on the hourly and then enter our full position back into the spreads. However; since we’re in an explosive rally does it make sense to DCA into our July spread position starting at the mid line RSI to hedge against the potential case where NVDA doesn’t drop too deep on the RSI (e.g. 35-40 RSI) before starting it’s next run?
Thanks!
So am I thinking right now is I’d like to get back in ahead of earnings. I think Nvidia is ripe to pull back sharply next week and then rally back to it high as ahead of earnings.
So we might buy it next week depending on whether it pulls back to the mid to low 120s.
Got it. So it sounds like your entry criteria is more based on price rather the RSI indicator? Are you looking for oversold on the hourly for your entry or does the price target trump that in this case?
ya I’d really like to not miss this entry by waiting too long which I’ve been known to do
It’s more based on price right now because of the opportunity risk based on the move we’ve seen. The rally is so aggressive that if we could simply get back in then great.
In other circumstances, we would probably wait for oversold
Sam, I reviewed your great chart.
NVIDIA has also dropped by $24 several times, even though it’s generally between $8 and $12.
There’s also the risk of seeing a more significant drop before returning to test the $140-$150 range, right?
Since the rally is quite aggressive and the financial statements are due to be published in 12 days, next week’s drop could be a drop from $135 to $122, or a drop from $135 to $111…
Best
If that’s the belief, what’s the rational in buying the same strike why not go $135/145 for example? Cheaper entry, larger profit margin, higher risk
Hello Sam,
It seems like a very risky bet to see NVIDIA drop to $120 next week, given its behavior at the end of trading on May 15th and in the pre-opening on May 16th, and then suddenly rise to $150 just before the May 28th results… does that leave 3 to 5 trading days for the decline and 2 to 5 days to go from $120 to $150 before the release?
Another hypothesis: a continued rally to $150 before the May 28th release and $120 after the release. We’ve already seen this in late August 2024 and early September 2024!
Thanks for your lights !
Best
Karl
Hi Sam,
Say when the pullback happens,
And a shorter expiry call spread is priced cheaper than 470 (maybe mid June or something)
Wouldn’t that be a better choice if you really don’t want too much time in the spread?
or you would rather go for a lower strike with the same expiry instead of same strike but shorter expiry?