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Hi Sam,
Are we thinking of taking the 2nd half of the allocation into our future hedges and final allocation into our put spreads with the QQQ at $602 again (10:09 AM PST)?
Thanks!
The put spreads are still on the higher end of the buy range (1.11 right now) so maybe we wait on those a little bit more. The future hedges won’t be affected as much by small price movements so maybe those are prime to pick up to complete the hedge position.
Second half position. We just brought it up on an update today. Here’s the basics of what we’re going to do. With the QQQ at $605 and with the QQQ having reached as high as $607, if it falls back under $600, there’s a very strong chance it’s over at that point. Getting as high as $607 and falling back under is a very negative indicator. It highly suggestive that we’re going into a correction.
So if the QQQ falls back under $600, our plan is to buy them quickly maybe as high as $16.50.
Alternatively, if the QQQ doenst’ fall back under $600 anytime soon but pushes up toward $610, we’ll wait for deeply overbought again to take that 2nd half position.
We may even buy a third position for a relatively near-term trade. IF the QQQ reaches deeply overoubgh and is trading at $613, there’s a very strong probability it will test $600 at that point. There’s always a back-test to establish breakout. So if we get to $613-$615, we may buy a total of 20 more contracts in Arryn or a $30k position. That would mean we’d have a 18% position.
Then the plan would be to close out the original 10 put position we bought near $600. That way we have a full entry near $613.
So that’s the thinking, We wait. If the QQQ rolls over and falls back under $600, we add. If the QQQ continue higher toward overbought conditions, we add up there.
Keep in mind we have the turn of the month in play now too. Maybe Monday 10/6 is a blood bath.
Hi Sam,
Any thoughts on where Nvidia is headed currently? Is there an upward risk to $200 in this environment with QQQ rolling over, or more likely to toppled with QQQ?
It looks like our October 17th put-spread is down quite a bit. Is the plan to still sell them on the next pull-back?
October 17th spreads we’re probably not going to sell on a small 2.5% pull-back. We need something more substantial. AT this point point, we outlined our general strategy which 3% allocation to 4 different spreads. Any one of them works can lead to the entire trade being profitable overall.
At this point, what we need to get out of the October 17th spread with any real value is that the QQQ needs to peak really soon and the correction needs to start. If that happens, we could potentially capture value on the October 17 spread.
More likely, what will end up happening is we’ll get value on October 31 + November 21 spread leading to fairly decent profits overall 25% to 150% or the November 21 spread will h ave to carry the day and we’ll potentially end up even on the trade.
Nvidia could potentially get there. Though I think it’s more likely to top out where it’s trading now. Like Nvidia has had a lot of trouble pushing thorugh the $180’s. From a perspective of new money coming in, it’s hard to justify buying Nvidia here or even at $200.
the QQQ would probably need to breakout tower the $610-$615 area for us to see Nvidia go to $200. Though who knows. Randomly, news has driven the stock up.
It feels to me that we’re at the very very end of the road here. That’s sense I get. The market is pretty much at the end of the road as the rally is concerned.
I mean at 123 days, we’re a mere 17-sessions shy of the longest rallies we’ve seen period — melt-up or otherwise. So we’re in the very final stages of the rally regardless of how one looks at this.
QQQ another all time high just reached!
Market feels very toppy. Remember, once people start mentioning it’s unstoppable, resilient, etc. peak euophoria… Poof
I mean it’s felt toppy for 2-3 months.., so who knows
It seemed toppy for a while. But every dip gets bought up, every bit of bad news gets ignored and it keeps hitting all time highs. It’s day 124 with no end in sight. There’s more rate cuts coming and money money flowing in every day. It doesn’t seem like this is stopping anytime soon
I was only half joking when I said we won’t see a correction until end of next year, but it’s becoming true lol
Hi Sam,
Any updates on when we’re thinking of taking the 2nd half allocation into the future hedges?
Thanks!
Hey Sam, how long would this rally have to go for you to reconsider the spread trade strategy in the future?
That’s not really the point of it. The whole basis of the trades is that it’s based on what most likely. It wouldn’t make sense to assign heavy weight to seriously factor in a one off because if you did that you’d be missing opportunity left and right all just to prevent a one off situation. It should remain a consideration, but to assign anymore weight than that wouldn’t be appropriate.
Take a look at all the folks who have been calling another ’08 incident for the last decade.
So normally our position isn’t ever to short the market at all as a trade. It only comes up at the extremes. Now that we have a 124-day rally, it becomes the parameter in the future if we’re ever to consider putting on a short-trade in a future extreme environment.
But I’ll be honest, these events are really rare. Even just reaching 100-days on a rally is really rare. We’ve only seen it occur on 7 occasions since 1999. That’s 26-27 years. So what is that? Once every 3.7 years.
It’s not a set-up we’re going to see all too often. But I think here’s the change we make. If we make a change, we’ll start the spread trade at day 100 and then later in at day 110, 120 etc.
It depends on where this one actually ends. The QQQ is going through all of the same types of things it goes through at various century tests. Today’s action of gaping up to $607 and then reversing course. Totally normal. Plenty of tops at $X08 or $X05 or $X15 even.
QQQ new ATH AH see if it holds
I think we sold our NVDL and QQQ calls way too early ???? I am getting that “FOMO”
I’m assuming if the pre-market prices hold up, QQQ and NVDA will be decently overbought
We’re overbought on the daily, not overbought at all on the hourly. Nvidia is slightly overbought on the hourly.
QQQ open $607+
72 daily RSI
70 hourly RSI
QQQ fading after open
QQQ weak; close under $597 bearish engulfing candle in play
VIX -34
QQQ nlod
SPY fadin
Funny how fear and greed index is at the lowest in 3 months. Love how all the indicators are pointing towards bull market