Samwise Quick Reference Handbook
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Hey Sam, do you mean close out completely or transition on the rebound following the first pullback?
Are you not confident that the correction would follow that pullback closely?
Also, does this still count as part of the consolidation for you? Or is it a breakout from that?
So it’s not really a full breakout from the consolidation. And in fact, I’m starting to suspect we’re going to see a multi-correciton situation here. I think what might happen is we get a correction down to $550, followed by a separate rally back up to around $600 leading to another correction.
Kinda of like what happened in July 2023. That would create a very ver large consolidation top in the market.
I think that’s something we could see.
But even if things don’t play out like that, what we’re seeing right now is sort of the scenario we talked about earlier. A breakout to $600 that leads to a top. So it’s a breakout in a sense, but in the end it doesn’t matter, because it generally just leads to a correction anyway.
For a true breakout, we’d need to see a full departure from the previous levels. But here, if the QQQ falls back a mere 4%, it just reenters the same trading range i.e. not a breakout.
On a real breakout — like we saw when teh QQQ broke out above $488 up to $500+ — it never returned to that range again. We just never saw those price points again. That’s a breakout.
or when the QQQ broke out above the $520-$530 area. we didn’t return to those levels, the QQQ just advanced forward.
That’s what’s required here. A move to $620 with the market not coming back down to fill the $590 gap.
Hi Sam,
When you say
“Setting aside the larger correction timing, near-term, the QQQ is due for a 20-25 point pull-back. $575 is where the QQQ is likely headed near-term.”
How are you deriving these expected numbers?
Thanks!
Near-term retracement cycles. Segmented rally charts. The QQQ is on a straight $40 run from $558 to $603 right? That’s 8%.
Even during consolidations like we saw back in Dec to February, a sharp move up near-term like that leads to a sharp pull-back and that pull-back is generally 3-4%. You don’t normally get an 8% short-term rally without a coinciding 3-4% pull-back. Especially very very late in a rally.
I’d actually call this segment 5 after consolidation. It’s actually worth an update. But this is at least a fifth or sixth segment.
That whole period between $574 down to $550 up to $583, down to $550 is a bit messy. It doesnt’ really fit into the segment analysis.
For one, the move from $550 up to $583 isn’t quite a segment in terms of gains. Maybe a very small segment. Also, it only added a 9-point new high on a mere 6% move up. Not quite what we’d see in a segment.
But here, the QQQ has rallied 8% and added 20-points new highs above the previous highs. Here’s what that looks like:
Sam, you back-out of these potential trades or I missed the tickets?
I think he had the trades out via limit orders, set at a specific price (outlined in the Trade Watch), but the QQQ had a little drop at the end of the day so they never got executed.
Yeah I had put out a trade at $1.15 but it never filled. Though I did see the price dip under $1.15 a few times. If it filled, I would’ve sent out a trade alert for the portfolios.
It sat there all day.
Hi Sam,
it seems like each segment has a consolidation period after, do you expect there will be a consodilation here before the correction? what are the risk of a prolonged consolidation?
We already had a prolonged consolidation we’re not gonna have two go back to back.
Chances are when this market tops it’s going to top very quickly.
We’ve seen this exact area before where the market consolidates breaks out and then hard tops.
It’s unlikely to consolidate for 5-6 weeks as we saw, breakout and then consolidate again for 5-6 weeks.
We don’t normally see things like that. I think here now that the QQQ has tested, 600 when it tops, it’s going to lead right into correction.
You can tell by how heavy the selling pressure is. If it’s relentless with the QQQ down $16 in a day or something along those lines; then we’re in a correction.
But if it’s more in-line with the selling we’ve seen between segments, then less likely for the selling to be a correction.
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In terms of whether we’ll see a seventh segment it’s certainly possible. I mean here we are on the sixth.
All we can say is historically speaking we generally don’t six much less seven segments. Even in the long rallies.
Each segment takes a very long time to play out because you have the really and the pull-back in between.
A seventh segments means another 20 sessions after this one ends. It would mean the rally extends to 137-140 days.
There’s simply no way to know for sure.
QQQ no penetration into $600s