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.
Hi Sam,
Could you explain the rationale behind
Why would the VIX gapping above it’s upper b-band act as a near term buy signal? Wouldn’t an elevated VIX be a bad time to purchase any long options or positions in general?
Thanks!
I’m talking a near-term buy assets generally indicator.s. It’s an indicator that the market is nearing a short-term bottom. Short-term rebound.
On capitulation day VIX was above upper band as was Nov 7th but not seeing that today on the hourly VIX chart. Starting to think this might be a better indicator than RSI oversold as a buy signal?
So the b-band indicator is on the daily chart and it occurs in two instances. First, whenever the market actually bottoms, we typically get a day where the $VIX both opens and closes above the upper b-band.
You also get that set-up sometimes ahead of a relief rally. The market hasn’t bottomed, but it’s gearing up to see a big multi-session rebound.
I wouldn’t say it’s a better buy indicator than the RSI, but it’s a major factor when taken together with other factors for forecasting a bottom.
Sam, Now that QQQ has rebounded and is up to $612, what is the most likely way that things will play out? Are we likely to retest the lows, or are we more likely to rally further?
We’re in a very uncertain zone. But what we do know is that it will reach overbought way before it’s able to reach any critical resistance zones which pretty much indicates it’s going to stay in a high volatility environment for a bit.
I mean we were nearing the mid-line at $612.50. We were just slightly above the mid-line earlier this week at $624. That’s a huge gap. Meaning, if the QQQ had continued on up to $624, it’d reach deeply overbought conditions. That’s a negative indicator. See my comment below on this.
I’d say right here at $610, it’s a little unclear. As we posted in yesterday’s briefing, the sell-off down to the low $600’s was clear. What’s less clear is what happens once it rebounds up to this whole area.
But then we gain in clarity once it either rebounds up to $620 (nearing overbought again) or if it falls back to the low $600’s again (indicating a small rebound and larger their leg).
Yesterday’s daily briefing hashes this all out pretty well. And nothing has really changed. Everything we outlined yesterday is still very applicable to today’s session.
Hi Sam, Any chance we tagged mild-oversold on indices and will just rally to end of year here or make equal highs? I do think we could get another change to add long term puts at the top but not seeing a return to lows here unless there is strong rejections at midline RSI around 615QQQ
No. First off, we only rally 12-15 days at a time when we have a segment in play. So a 12-15 day run is generally teh most you get on a full rally. That wouldn’t reach year end.
But more importantly, the QQQ is on a path to be more overbought than it was last time it was at $620. So if it gets up to $620 again, it will be well above its midline. That’s generally a negative indicator. It means it’s taking more momentum for the market to get back to the same place it was at before. It’s negative divergence signal.
I don’t think this is going to be a segment at all. We’re in a very different space now. Just like when the QQQ rebounded to $624 between last Friday and Tuesday and then fell back to $597 by this Friday.
I think we’re more in that sort of space. Big swings up/down. NO set segment.
We are past the 150 day rally mark at this point right?
SO we’re at 144-days until the QQQ makes a new high. If it doesn’t make a new high, then all of the session you see now get added to the correction category.
We count correction period as the period occurring between the highest point and the lowest point in the market. We cont the rally period as between the lowest point and highest point.
So has been 12-days. Technically we’d be at 156 days now if the QQQ made new highs beyond $637.
Hi Sam, did we get close enough to the mid-line to satisfy the condition of an oversold bounce or is there likely a little more upside based on how the market usually reacts?
So not quite. Normally, we’d need to be a little north of the 50-level. And that’s really used as an indication for when to close out positions on a bounce. Like if we buy a long call position when the QQQ is oversold with the goal of playing the oversold bounce, the mid-line gives us our exit condition. It tells us, okay the rebound has gone far enough to lead to uncertainty. At north of 50, we could see the asset rebound all the way to overbought or it could just stop there and continue lower.
Looking at the mid-line gives us a reliable exit point. If the asset hasn’t reached the mid-line, then the rebound really hasn’t gone far enough and if it simply heads lower, well then it likely becomes oversold quickly again setting up another bounce.
That’s why we generally wait until the mid-line to close short-term long calls; or as the case might be sometimes, to close out puts we bought.
Good evening Sam, So Nvidia has recovered its beta version from QQQ, interesting!
Could you explain your latest chart, particularly the 30% drop in Nvidia’s stock price below the $150 support level?
Also, we’ve always seen Nvidia’s stock price drop sharply before the earnings release, but that’s no longer the case.
Why is that?
Thanks
Are you also aligned with some analysts who predict NVIDIA’s price will reach $350 by the end of 2026? They point out that with OpenAI’s IPO and the acceleration of GAI, profits will skyrocket. Vinod Khosla shares this view and even suggests that the US government should take a 10% stake in companies like OpenAI to redistribute wealth and mitigate the job losses that AI will bring.
Sam,
Thanks in advance for your insights.
No. That’s excessive. $350 is way too high. You have to think about the capital it would take to get there in such a short period of time. You’re talking about adding $4 trillion in market on top of a 4.56 trillion market cap company. That’s not going to happen with the scope of a year.
It’ll get there eventually obviously. But what’s more likely to happen is Nvidia might run to $250-$270 by the end of next year.
What you’ll get is a long period of heavy volatility and then a recovery from that volatile.
Our target last year was $200 for Jan 2026. We got there a tad bit early, but it’s the same sort of pathing. Between when we had our price in July 2024 and when Nvidia reached $200, the stock had fallen to $90 a share in August 2024, rallied to $130 in September fallen to $100, rallied to $150, fallen to $86 and then rallied to $200.
We’ll see something similar as it progresses toward $250-$260 a share. I think that’s what we’ll likely see this year.
If Nvidia makes a march to $300, it would happen at the end of 2026 as we head into 2027 after a long period of heavy volatility first. And it would require another enormous market rally.
The problem is at $4.6 trillion, now for Nvidia to add value, it has to add trillions in market value. There just isn’t enough capital to makes that push. That’s why you see Apple and other similarly situational companies, barely push the needle. Once they get up to 2-3-4 trillion, it becomes increasingly difficult to add value due to supply/demand constraints.
This was explained in the post. Think about it. Nvidia fell from $210 to $180 on a 6% drop in the QQQ. What happens if the QQQ drops 12-15%?
The correlation tracks. If the QQQ falls under $600, drops to $570, that’s going to push Nvidia down to near $150 a share.
Also, you have to consider the size of the Nvidia rally from April to today. It has massive built-in gains with no retracement. The market rally is at the end of its road.