Samwise Quick Reference Handbook
To streamline our daily blogs and conserve space, we’ve organized key resources into a convenient, collapsible dropdown menu below. A sort of Quick Reference Handbook if you will -- as our friends in aviation might call it. By clicking the menu below, you’ll have qu...
Please login to view this page.
Your website pops up when I write Sam Weiss on google now. Pretty sure it didn’t before. Pretty cool milestone
Wait, so this pullback is only the standard 3.5-4.0% we have on a segmented rally and the odds of a larger pullback is around the day 80 timeframe? And you said this week could be the top aka 565? Thanks, Sam.
I too have this question. My current understanding is that this 4th segment ending is the beginning of the correction is most probable path because most bull runs have 4 segments. But the standard 3.5%-4.0% is still probable enough that if it does happen, then some trades can be made with some high confidence since now the bull run is nearing record territory. That is why we did a partial trade yesterday.
Let’s see what Sam says!
See the answer above. It happens both ways. Sometimes you get a correction peak at the end of the fourth segments. Other times you get a segmented pull-back first, then a retest o fthe highs and then a correction top later.
“Wait, so this pullback is only the standard 3.5-4.0% we have on a segmented rally and the odds of a larger pullback is around the day 80 timeframe? And you said this week could be the top aka 565? Thanks, Sam.”
So because the rally has lasted 19-days so far, we are due for a segmented rally pull-back of 3-4%. That’s what’s due right now.
Generally speaking, we’ll pull-back that 3-4% and then rebound back to the highs for a retest ahead of either (1) a 5th segment which is uncommon or (2) ahead of a correction.
Now this has played out in a number of different ways on the 4th segment. Sometimes on teh 4th segment, the market just collapses. There is no segmented pullback. We just enter a correction. Other times, the QQQ pulls back 3-4%, rebounds to retest the highs and then sustains a correction without a 5th segment. But we still rebound first. This happened in July 2023.
In July 2024, no real retest. We went from segment right into a correction.
In July 2023, we had a segmented rally pull-back, a retest of the highs and then a correction.
So it really happens both ways.
—
The 80-days thing just highly indicates we’re nearing the end of the run. Why 80 days specifically? Because when you look at the intermediate-term rally table (Table 4.1), what you’ll find is that MOST rallies end by Day 82. In fact all but 6 rallies end at Day 82 or below. That’s why we’ve been targeting that Day 80 period for some time now. Because once you get to Day 80-82, you’re now talking about extreme outliers. The top 6 longest are 87, 89, 95, 100. And anything north of 100 usually has some extenuating circumstances. What’s more, as we’ve mentioned, corrections tend to occur in that end of month to beginning of a new month window. A lot of selling occurs in that time-frame.
When considering that July 31 is Day 80, it starts to sort of all come together.
Rally Days for High Vol Rallies
114
111
100
95
89
87
————-
Note the number of rallies that end by Day 82
————-
82
78
74
72
72 (current)
64
55
52
52
51
50
42
41
39
36
33
32
30
28
25
23
22
18
18
16
14
12
Ahhh this makes sense – appreciate the throughly explanation (or re-explanation). Learning a ton.
Thanks for the very detailed and thorough explanation (or maybe reexplanation). So from a fundamental perspective, a lot of the liquidity that has been injected into the market by way of SLR regulations being relaxed and Bessent doing an indirect form of QE has been mentioned to be supporting the market. If they continue these efforts and continue to feed the market tidbits of positive news flow along with backstopping the markets – do you see a scenario where there is no correction? I know from the technicals, the odds are not in it’s favor, but wanted to see what your opinion was.
We’ve never not seen a correction. In the QE era between 2010 and 2020, we had two types of rallies. Long melt-up rallies that lasted 140 days at times and high volatility short-lived rallies. Melt-up rallies generally add only very small percentage returns both overall and on a daily basis. For example, we have no melt-up rallies that have taken the QQQ up 30%+. We’re already at 40% right now. Most melt-up rallies add returns at 1/3rd the pace as the current rally.
Melt-ups are indicative of high liquidity environments. I do’t see that here. In fact, the percentage return on this rally has been one of the highest on record in the last 15-years at 0.57% per day. The average melt-up is at 0.17 – 0.20%.
I know I’m beating a dead horse but…even despite your on point predictions on the movement of certain stocks, it’s a useless exercise to try and time the selling of say, NVDA at a supposed peak, and then buy back in later? For long term holders, you’d always recommend holding on (and then hedging using puts/covered calls)?
Tax implications could be another thing.
Another thing is that I’ve been thinking about stocks that define a decade…for example, Amazon in the 2010’s. Could it ever get to a point where a new large cap company takes hold of our collective consciousness, and you’d consider rotating out of NVDA and into that stock? Because currently, NVDA is the bulwark for the portfolios of many top fund managers…but I’m wondering if that could change one day (in the distant future perhaps).
Also, since this isn’t common (and hasn’t really occurred yet since the blog’s inception), do you have strategies to identify likely market crashes and big time recessions using your markers and indicators, as well as strategies to liquidate positions upon such identifications? Or these are things we can’t really know and time for sure…and the best we can really do, is approach investing with the right set of fundamentals?
Appreciate everything that you do!
I think market technicals can often times predict market and economy fundamentals.
Hi Andrew — let me see if I can answer each of your question.
There’s far too much risk in taking this approach outside of extreme circumstances. Let me explain what I mean here. We do this to some extent but only under very very extreme situations.
So when we sold the Nvidia $150 covered calls for $9.40, we were essentially saying that we’d be okay exiting Nvidia at $159.40 come September. The reason we’ve done so is because the only way that we’re forced out is if the market somehow rallies beyond 100-days. It would take a market outlier event for us to close out the Nvidia trade and if we did, it would be under extreme circumstances with the stock having rallied from $86 to $160.
In some sense, we are timing the market here, but we’re essentially only doing so under circumstances. I think that’s the right way to approach it.
I think straight could be an okay idea. But I’d rather go this route of selling covered calls instead. The problem with selling and buying back outside of those parameters is that if you don’t do it under extreme circumstances, then you risk being left on the sidelines. The opportunity risk is too great.
So the way to approach it is as we’ve done. Sell covered calls that only get called away under extreme circumstances — in this case the rally would have to extend beyond 100-days and Nvidia would need to close north of $160 during that expiration period.
—-
Of course things can change. It happens all the time. Apple was the leader of the 2010 – 2020 era. That whole period was lead by Apple. The stock went from a small company to the largest company in the world during that era.
There are a large number of open ended issues that can be worth trillions of dollars — life extension, robotics, quantum computing, clean energy etc.
We don’t need to worry about that. We have hedges for that very reason. Suppose for example, the QQQ decided to head right into a financial crisis like collapse. Imagine if right now this is July 2008. We’re only a month or so away from a huge collapse and Great Recession. If that happened, we’d produce gains.
If the QQQ fell 55% like it did in 2008 falling from $560 down to $252 a share, our June 2026 $500 puts would be worth $270 a contract x 10 contracts or $270,000. Our March 2026 $400 puts would be worth $170 a contract x 16 contacts or $272,000. Our put-spread we bought yesterday would be worth $65,000. And we’d have $28,000 in cash. Even assuming our long positions are all worthless — they wouldn’t be due to the time value — but even if we assumed $0.00 for all of our long positions, our portfolio would be worth $272,000 + $270,000 + $65,000 + $28,000 =$635,000.00
Our portfolio would go up 155% on a crash of that magnitude. That’s the entire point of hedging. We’re giving up a lot of gains for hedging and it’s to protect against this exact scenario.
We wouldn’t liquidate positions. instead, we’d wait for specific deeply oversold set-ups to transition long, catch the rebound and then transition short again. We’re holding the March $400 puts because we bought them on the rebound back up to $470 from $400 a share. We did so on anticipation that what happened back in February- April was a 2008 crisis type event. And we assume this and pay insurance to protect against that possibility. In fact, we’ve paid $19,376 in losses to date for that insurance (Paid $26.5k and it’s down $19.3k). But we’ve also made $47,000 on our June calls and another $38,000 on the December calls. Not to mention the coveed calls we’e sold for $15,640 and $5,640. If those calls expire worthless, we’ll have paid for our insurance.
Anyway, the point here is that rather than worrying about liquidating positions by trying to predict something nearly impossible to predict, we just insure against the outcome and make sure the market pays us handsomely if it happens.
That’s how we’re currently set-up. The market crashes in the fall like it did in 2008, our portfolio skyrockets as a result.