Samwise Quick Reference Handbook
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even though QQQ will retest since NVDA is 2:1 correlated I assume we can expect a push with NVDA as well, yah?
Sam, just for clarification, if we retest and come short of the $583, say stop at $574, do the days still count as correction days from day 89? We are on day 6 now I believe, if in fact the correction has already started, but assuming no new highs rally ends day 89, and correction starts on what would’ve been day 90?
Yes. When looking at the NASDAQ tables, we count each and every day from the absolute peak as part of the correction.
So when you look at a 5-week correction, sometimes that might involve 7-10 sessions of essentially sideways action.
So if the market doesn’t make a new high, this correction is already 8-days long. That does happen quite a bit. But if it makes even a slightly new high, then it resets. We just count days from absolute peak to absolute trough.
“We’ve seen this type of thing before and it invariably always leads to a large bounce. I expect we’ll see the QQQ rebound to $572-$574 a share at some point in teh near-term.”
Why do you choose to not go for a (a very small) ultra near-term (Sep 30) long position here, Sam? I think you already intended to on Tuesday, but in the end decided against executing the trade?
We’re not at extremes anymore for one, we’re at the top of the trading range (outside of correction) for two.
So here’s the big thing to worry about. We could have taken a position, but in some corrections, the market might ignore oversold conditions and just push lower. We saw that exact thing happen in the April correction. It is rare. Usually as in 90% of the cases, when we’re extremely oversold, we rebound.
So a trade can be made there and it would most likely be successful. But I simply don’t want to take another risk that the QQQ decides to roll over. Like I need to see these short trades we have on succeed first. It’s a trade record issue.
But in most cases, we would take that trade if we didn’t already have trades in the mix.
Sub-20-RSI on the hourly is always a strong buy set-up. Always. The fail rate on that is very low (~10%).
We’re seeing exactly the type of action we should see off of deeply oversold right now. Rebound unto $574 is exactly what we should see.
Didn’t NVDA also consolidate in both May and late June after being super overbought but then continued to make new highs? What made those two instances different from the rest? I’m assuming May was due to the rally still being in early stages, and June was a rare exception, but would be interested to hear your feedback since you’re more knowledgeable on this.
Considering how much it’s rallied since the June consolidation, plus the fact that it looks like this time it’s consolidated for longer than when it did in May and June, I agree that it’s due for a pullback
I was looking at that as well, they didn’t make new highs suggesting a top of a rally.
So as we’ve mentioned a few times in daily briefings. And this is important. There’s a fundamental difference between early stage and late stage overbought/oversold and consolations. Stocks will push deeply overbought at the start of a rally. It may pull-back sharply and it may consolidate or trade sideways ahead of another leg higher. Early stage all of that always points pretty much higher.
Also, separately, the size and scope of consolidation matters. In May, there was no consideration at all. Not anything remotely close to meaningful. Nvidia reached deeply overbought with the market, pulled back with the market and then continued higher. There was like a week in there were it traded in a range. Barely noticeable on the chart. Not what we mean by consolidation. Look at the chart above. These things are months-long periods where there’s a clear break in the trend and pushing the trend sideways.
June consolidation was not really a consolidation at all. It trended higher the entire time just very slowly. Whereas right now, it is a true sideways consolidation after being deeply overbought — and most importantly leading to a drop-off from deeply overbought to the mid-line in the RSI.
I’m thinking that Powell will be more hawkish in his speech tomorrow and the market selling off as a result of September rate cut probabilities lowering. if that’s the case, I can easily see continued selling next week and as a result of NVDA earnings.
All the way back to overbought hourly, I guess the deep oversold bounce has been fulfilled (and pretty much right in the range Sam mentioned ????)
Relax. Look at historical events, this is very unlikely to change anything. We’ve seen this before.
SPY at ATH and touching deep overbought hourly, but also only pulled back about 2.2%. Wonder if this tells us anything different about the market or it lines up well with the QQQ analysis
This is pretty close to counting as a retest anyway, no? We’re within 1.5% of the high. Like Sam alluded to this week, these indicators don’t have to EXACTLY match what we’ve seen previously (i.e. exactly 1%). The overall conditions and pattern are what matter
Since rate cuts are on the table now, what do we think the trigger will be for the correction after we finish the retest? Or will it be something like the DeepSeek v2 Saga, NVDA Ernings, AVGO Earnings that trigger it? ????
100% going to be Golden Corral related.
like the food chain? Lol
first time here lol ? News don’t matter for market movement. Market makes a move first before news.
Lolol
No trigger required as we explained in one of the recent briefings. Don’t expect a catalyst. The market doesn’t tell you ahead of time at all. That’s not how it goes.
If you look at every single peak in the market, there’s no catalyst. It just happens. There’s either something that is already well known and established. The market often ignores that catalyst for weeks or even months (think back to Covid). Until one day it just decides to randomly sell-off.
Or the market will just randomly peak and sell-off and then the financial press will attribute something as the guiding reason for the selling.
The reality is that it’s not even based on anything market related. It’s more supply/demand related. Profit-taking or asset rotation.
Don’t think there needs to be some guiding reason for the market to peak. If that were the case, we’d have 237 day rallies right?
The market has now given us all of the signs we can want that we’re at a peak. We have every indication now telling us we’re at a top. The biggest one being that we had a segment reach $574 lead to a 4% pull-back and then the very next segment only reached $583 before also going to a 4% pull-back. That right there is the absolute BIGGEST indiction we’ll ever get that the market is at a peak. New highs. No new highs. Interest rate cuts. No interest rate cuts. It does’t matter. The momentum is telling us that we’re at a peak.