Samwise Model Portfolios
The portfolios below are separated by launch dates. Each portfolio is entirely independent and has no bearing on any other model portfolio. We launch entirely new portfolios during each market correction as an illustrative tool for new subscribers who weren't present during...
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Hi. So, do you not think it would be wise to buy even though there is a 4% pullback before next week due to the risk of early correction?
Only as a trading opportunity. We’ll do that in Baratheon and nowhere else precisely because of that type of risk. It’s best to make intermediate-term investments and take on risk during the early and mid part of the rally where there’s upside and the risk is at its lowest.
Right now, risk is at its highest. WE could be wrong and the market could run longer than we expect. But you can only make decision based on the evidence we have in front of us. And what we do know historically is that January is an extremely dangerous month after a long run. There’s a high tendency to see major profit taking in January after a year where the market is up massively like it is this year.
With regards to the 4% pull-back, there’s a trade there if the QQQ is oversold. Because even in corrections, when we get oversold conditions on the QQQ, it rebounds. We had three big rebounds in the July – August correction. one time the QQQ rebounded I think 20-25 points. That’s after the second leg lower where it reached oversold conditions.
So we’ll thread that needle with Baratheon given the portfolio’s general strategy. For the other portfolios, not the best idea. But we’ll have to see how things unfold when it comes.
Hi Sam. Any thoughts about an Apple pull back? It seems like one will happen soon. Thanks!
I have the same question about TSLA.
TSLA is in the same exact boat as Apple except with Tesla we have a lot of external factors at play. So it’s tricky. The company has gone up nearly 150% since November. Every time I seen hear the name Tesla I get really annoyed. It should be in our portfolios. It was high up on watch list in November before this run. It was ripe for a run. We should have just bought in parts. We could have at least had half of this.
And if we were long, we would be selling FYI. Even though it’s due for a pull-back, you play that by hedging.
Apple traditionally does exactly what we’re seeing right now and January tends to be a peaking month for Apple. All during the iPod era, it did the same exact pattern we’re seeing right now. It would run massively from July to January and then crash in January. It did this repeatedly for years.
And even now, Apple’s biggest quarter of the year is the Holliday shopping season (fiscal Q1 for Apple is Oct – Dec) and often it runs hard going into year end and then plummets.
we bought puts today in Apple. It is extremely overbought on the daily chart and due for a big pull-back. Our covered calls we sold ($250’s) will very likely expire worthless. By the time Apple does pull-back, it’s likely to drop to around $230 (10%). In the next correction, I expect it could go as low as $215.
2:06PM There seems to be some action going on QQQ.
Lol
Of course I am paper trading this down leg. Why do you ask? LOL
Agh! I was at lunch when the trade alert went out and now qqq down over 1% . I missed my boat again!
Are we going straight to correction or this is the pull back before the last segmented rally?
I am sorry but do you really expect somebody to know that?
So we need to see how the down days go from here. So far this looks like a minor pull-back. If the QQQ were to close down -15 or something. I’d say correction straight up. The initial selling does say a lot about whether we’re in a full correction or just a pull-back.
Take a close look at how we peaked in July for example. We had a massive gap-down with a huge intraday sell-off and close at the lows. That was 100% correction heading.
You want to see aggressive selling at the outset.
That’s not to say that “all corrections” unfold this way. they don’t. The market correction unfolded slowly.
It’s just to say that in order to make a forecast on that this early, we’d need to see heavy selling. So are the selling isn’t quite there to make that jump in forecast.
On July 11 it went down by 2.1%. We are at -2.0% at 3:10PM.
Edit: -2.4% from today’s high.
Yeah. I think I’m going to post tomorrow’s daily briefing later tonight and then outline a trade plan for Baratheon portfolio trade.
Take a look at this. Compare the two situations. The blue circles represent the start of 3-4% pull-backs. The squares represent the start of corrections. Now we could easily have a 1-off session. It has happened before where we get a 1 single session hard down day and that’s it. It could easily happen. But this is also the same exact way corrections begin.
Same, just want to say that tonight you can have a nice glass of wine. Well done.
Hi Sam, what are your opinions on the smaller AI product companies like SoundHound AI gaining traction in the last month or so.
Did Powell cancel the Santa rally this year? lol
Wondering this too. Sam, do you think we could still see a Santa rally and a final segment up?
Sure both of those things can easily happen. This is all game of probabilities, right. We have seen instances where days like today are one off events. In fact, the last few times we saw days like today the next day the market was green.
But straight up, I have seen instances where the QQQ has gone down 3% a day and it was a solitary one off event. We got no follow through at all.
So it’s very possible that we might get another 3-4%. move up.
What today’s selling does tell me is that we really are at the end of the road. If the QQQ does somehow pull off a rally here and has a final segment then we are going to correct in January.
The odds suggest that we are more likely in a correction right now because 3.6% down is a lot for one session.
Sam,
Even if it’s a correction can this set up a trade on Baratheon/Targaryen?
QQQ is @ 20 RSI. NFLX @ 21 RSI MSFT 21. TSLA approaching.
QQQ started the day with an RVOL of 0.5 and we are at 1.71 that’s 3X the volume in the last 2hrs of trading.
515 support seems to be holding for now.
What are we looking for tomorrow or what would be the best way to trade a possible bounce?
So not Targaryen. For Targaryen, we will put on a trade for a 100% return. This is looking increasingly likely that we’re in a correction. Which set us up to make a really good trade in Targaryen down the line in January.
For Baratheon, we may very well put on a trade as early as tomorrow. I will probably post tomorrow’s daily briefing later tonight and outline a plan of attack.
During this afternoon’s selloff NVDA pushed -5.8% and lost its 130$ level again, while QQQ pushed to -3.9%.
Yeah Nvidia is always going to have a higher beta than the QQQ and its delta relative to the Q’s is going to be way higher than 1:1. If the QQQ falls 10% you could expect the NVDA to fall 20%+ or something along those lines. In July-August, QQQ fell 15% while Nvidia fell 35%. In September, the QQQ fell 7.7% and Nvidia fell 24%. I’m saying that Nvidia will see a much lower ratio this time around because unlike August/September, Nvidia wasn’t at its all-time highs like it was in September and July. What’s more, Nvidia has already spent a long time consolidating. It was oversold going into today’s session. These things sort of help the stock going into this correction.
The big question here is how much of difference are we going to see this time given the fact that Nvidia is beginning this correction way off of its highs already .
Consider this. Forget about what Nvidia did intraday and consider how both assets closed. And then think about how Nvidia has performed in the past when the QQQ ended of the day down over 3.6%. .
Nvidia only closed down 1.14% today versus the QQQ which closed lower by 3.61%.
While, I haven’t done a look historically, I’m willing to bet that’s one of the best relative performances that Nvidia has ever had with a QQQ down 3.6% in a day. At least in the AI era. I could be wrong, but I doubt it. In most cases, the QQQ falling 3.6% gonna hurt Nvidia pretty badly.
The broader point here is this. If Nvidia were trading at its all-time highs right now it would be down by a lot more than 3.6% Today, Nvidia would’ve closed down like 7-8% if it were trading near its all-time high like the Q’s were this morning.
And the ultimate point I was trying to make is that people need not worry that Nvidia trading down in the low 130s subjected it to some larger risk of retracing to a much lower bottom point than if it began the correction closer to $145-$150.
Nvidia’s ultimate bottom doesn’t change much. If Nvidia was trading at 150 going into the correction it’s still gonna go towards a very particular low point and that’s true even from the 130s.
Today is sort of a testament of that. With the QQQ down 3.6% it’s already almost 1/3 of the way through of a standard correction.
As of right now, I’m thinking the NVDA bottoms somewhere in the 115 area. I think it’s going to resist some of the selling pressure from the QQQ.
Thanks Sam for quantum analysis.
So you wait for correction to buy some ?
Risk is high with rallye since november…
Best