Samwise Quick Reference Handbook
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Hello Sam,
Thank you for the post and the table above. Given the market consolidation, do you think QQQ and SPY could reach new all-time highs early this week?
Easily. We can easily see the QQQ go up $8.00 tomorrow after closing at $533 today or something like that. Or it can take weeks of consolidation. There’s no clarity on that. We just know that all-time highs represents the center of gravity and that’s where the markets want to push toward. It could get there immediately or after further consolidation.
gotcha, thanks a lot!
Hello Sam, Thanks for this update. Regarding NVIDIA’s decline of 8 to 20 points or more, are you seeing this abruptly or over several sessions, at a rate of 1%-2% per session, for example, over several sessions?
Best
Karl
Yeah it often happens over 3-7 days. A week and a half.
What we would need to see is Nvidia reach overboard conditions. It pushes overbought and then generally speaking we get a pretty big pull back.
Go back to between October and January of this past year and you’ll see several 20-point pullbacks like that. And they occur over a period of days.
As I mentioned before there’s a difference between a near-term pullback and a full correction
Here we’re talking about just a near term pull back during this intermediate term rally.
When the market tops and sustains a regular correction, Nvidia probably is going to drop 20-25% at least
Are you expecting to evenutally see a pull back, followed by a recovery, followed by a correction?
So as Nvidia isn’t overbought, I don’t know whether it will even see a pull back on a near term basis.
For example, suppose the market decides to set an intermediate-term peak today. It just stops right here and has a correction.
Then we don’t really have a near-term pullback at all right. It would be straight into a correction
We can’t model a pullback until Nvidia actually pushes overbought on the hourly and then actually sustains a reasonable-sized low volatility pullback
What we can say with a high degree of confidence is that Nvidia is due to sustain a correction along with the market.
If Nvidia pushes up to the 150 level and becomes overbought, we will probably put on a Nvidia short trade for a near term pull back.
Now, whether Nvidia rebounds after that short-term pullback is unclear until we actually see how it plays out.
For example, we could see Nvidia rallying to 150 peaking, pulling back $20 and then rebounding to the highs before ultimately sustaining a full-blown top ahead of a correction.
Alternatively, we could see Nvidia rally to 150 become overbought and then just go straight into a correction
The only thing that we are sure of at this exact moment is that Nvidia is going to eventually sustain a correction
The near term stuff is unclear
It’s unclear because there’s no way to know that when the stock tops whether it’s topping ahead of a correction or simply topping ahead of a near-term pull back
They will both look the same. And in that sense, all we can do is say Nvidia is due for a 20 point pullback once it reaches overbought.
Once it pulls back 20 points, there might be different bits of evidence pointing at whether it’s going to rebound from there or whether it has just begun a correction.
Back in November, December and January Nvidia saw several near pullbacks before ultimately peaking ahead of a correction.
During any one of those tops, it could have been THE top before a correction
I hope that makes sense.
The point here is there’s no way to know whether a pull back is just a small pull back or whether it’s something more until it actually happens
So all we can really say right now is that Nvidia is soon going to sustain a 20% correction That that’s all we’re certain about right now
And that correction will be due to the market topping and sustaining a correction
Hello Sam,
For example, in January 2025, NVIDIA stock fell from $147 on January 22 to $116.66 on February 3, 2025, a decline of 20.68% in 9 trading days.
NVIDIA stock then fell from $116.66 on February 3, 2025 to $139.23 on February 19, 2025, in 12 trading days.
Then the correction from February 20 to March 10 of 23.65%: $140 to $106.98.
Then a 13.50% rebound from March 10 to March 24, from $106.98 to the support level of $121.41.
Then a correction or a simple decline of 22.32% from March 24 to April 4 to $94.
So, indeed, if we zoom out to the cycle from February 20 to April 4, the correction was 32.69%.
We could very well see this happen again here, with, as you suggest, a 20% decline by early July, followed by a rebound before a stronger correction by August or September, leading to a rally at the $170-$190 support level by November to January.
Best
Karl