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...
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Is it alright to be imprecise and allocate on the way down to 490 or so if that happens later in the day? Seems like we are to allocate short term positions all in by end of day. Gap fill from post Election Day is also nearby
given the intermediate term outlook does it make sense to sell off most if not all the spreads on the of 15-20? I also assume we may not allocate any more spreads unless we see a significant dip Monday? currently we are 60% allocated due to the sneak up into this dip. if it were a normal correction leg down would your allocation be similar as well percentage wise at the 20 RSI hourly?
It does make some sense to reduce or completely close our QQQ position and we plan to do that in this bounce. What we’ll do is close out some of the position if the QQQ continues ahead up toward the $515 area. That would represent a near $20 rebound from the lows. Probably we’ll close out most of the position at the point.
Not sure what we’ll do with Tesla on this rebound. I’m going to take a close look at our Tesla position and determine whether we reduce or not.
So we kind of always want to hold a certain level of cash at all times and only ever go fully invested in situations where we feel very confident that the market has really hit an extreme or unusual low. We’ll only ever get fully invested if we feel very confident that the rebound is going to happen and that it will likley produce gains from those final entry points.
During this sell-off, that was the low $490’s for me. If the QQQ got down to $492-$493 or thereabouts, we’d likely have gone all-in at that point.
We may go all-in fully invested in the next leg lower if the QQQ ends up reaching oversold conditions on the daily chart on the second leg down.
$NYMO not close to -100, are we still confident of QQQ bottoming close to $490?
So those are two different time-frame. W hen the $NYMO hits -100, that’s a correction ending event. We’re only talking about near-term here when we say “bottom out.” The market is still on its same leg lower. $40 is a really big leg down and we should get around a $20 rebound.
what about nvda. if it goes down further the bounce won’t recover to what we are now
Nvidia will likely rally back to its highs when this is all said and done. Mostly because earnings were really strong and this is a sentiment driven selloff. Once the correction ends, it’l return to its highs.
Also, oversold bounces in Nvidia have been $16-$20. That’s about where we can expect it to go on the next rebound.
u meantiined that there will be a 2nd leg down in qqq.
how further down do u think nvda will be affected by this qqq 2nd leg after this rebound?
Not sure because Nvidia sometimes outperforms and other times it could lead given the higher volatility. But I do think that once the correction ends, Nvidia likely returns to its highs pretty quickly.
Hey Sam,
if we’re expecting another Friday sell-off during the day, wouldn’t it make sense to close out some trades and buying back in lower before market close or on Monday?
honestly the articles about the bounce and subsequent rallies made me hold off on selling 3 days ago. the hit to my portfolio has been substantial
so true wish we stopped trading and have wait and watch strategy and maybe selling profit makers …lost all gains for this year so far….
I was worried with the amount of trades made this past week prior to Nvidia earnings, but granted, most of the trades were made in the high risk portfolios (e.g. Targaryn and Baratheon), so I sized accordingly, but feeling the same sentiment.
Both of our trading portfolios which only make up a small portion of our assets anyway, are still deep in the green. In fact, we are barely below where we were just on our previous trade. Like if we back out the trades, we made like just a few weeks ago that’s where we are right now.
Allocation & asset selection are critical. We only have control over what we are doing and the trades that we make.
And right now, our trades are set up to do really well
We can only control what we’re doing and our portfolios are all green at the moment. Also, we can only outline what is most probable under the circumstances.
Suppose we never trade oversold set ups then we’ll just miss a highly positive trade 90% of the time.
The end result of this trade is we will probably end up pretty green based on the way we allocated and based on the assets we purchased.
Thanks for the quick response. Today is starting off well. Hope it has legs to maintain through the day!
Really guys?? SW has pointed out several times in no uncertain terms that these trading portfolios should make up a small fraction of your funds!
And if anybody knew when the market would go down and how much exactly we’d all be millionaires.
So take some responsibility for your actions alright? Nobody forced you to participate.
All apart from the fact that this is just the way this stuff goes, doesn’t just go straight up.
Sam I hope you do t take this to heart. I really appreciate the way you are managing these portfolios and the way you explain what you are doing and why.
Edit: not addressed at nahidwin
I’m sure Sam gets it. There will always be some people that struggle with hindsight bias and getting too results-oriented in a game of probabilities when faced with negative results. These results, though, are just temporary and not definitive unless we hit zero (not happening) or people give into the fear and get out entirely.
There are competing expectations right now. On the one hand, the market is very oversold and due to rebound very substantially. On the other hand, there’s a trend of the market selling off on Fridays.
One of those things are recoverable. If the market pulls back on Friday, I can just rally on Monday. But if it rallies right now and we’re on the sidelines then that’s that for the trade. So we can’t just go to the sidelines just because we think there’s a potential of a pullback happening on Friday.
PCE inline with expectations. can we expect some relief today, Sam?
Not sure it will happen today. What we do know is the QQQ has remained oversold for a long-time and that every prior instance where the QQQ has been oversold like this, it rebounds substantially. The timing of that is usually immediate. But right now, we’re in an outlier event. It will still be very soon. It’s just that I don’t think we can forecast precisely when that will begin. Just that we’re in a spot where it’s overdue relative to the two decades of trend data we have.
I’ve found it does that when someone comments on the app, there’s a little delay with the website.
Exciting day ahead! Market can’t go up in a straight line unfortunately. Very optimistic about the trades we made and will be making!
So stoked for the weeks to come!
(10:30) Nicest green bars in a while. Not going in yet? The spread is at 2.25, still below our avg cost.
The volume is not very elevated.
Where will NVDA bottom Sam ?
See the most recent daily briefing post. If I had to guess, it would be right around where it as this morning. We should have probably did some buying there. It just happened to quickly to even trade it.
Hello Sam,
Can you share your analysis about Frontline and CMB TECH ?
Also what about Quantum stocks ?
Hi Sam,
What is the typical relationship between correction legs and rebounds within the context of a multi-legged correction structure? Are rebounds usually ~50% of the associated correction leg? Does this apply broadly or just with broad ETFs (e.g. QQQ)?
Not always 50%. It often is, but sometimes it could be 30% and other ties it could be 70%. If you look at the August correction, the first leg down went from $502 down to $452 or about $50. The rebound went from $452 to $474. So that was about a 44% retracement. Just shy of half. Then we had a second leg and it was over.
That’s very standard. Many corrections only have 2 legs. In this bull market that started in 2023, most have only had 1 leg with only two corrections having 2+ legs.
Correctly typically last 15-20 days total. Rebounds and everything. What we’re seeing here is a corrective period that started in December and is still ongoing at 50-sessions now making this the second longest corrective period going back to 2010. July to November 2023 was the longest at 71 sessions where we had three successive 8-9% corrections followed by successive massive rebounds of 7-9% each.
This doesn’t apply to individual stocks. Just to the broad market and their related ETFs. SPY, QQQ, DIA etc.
Individual stocks have their own established trends.
Digging these write-ups and transparency. There’s a lot of effort going into this. Thanks, Sam.
I can’t believe what happened in the WH today is good for anything. I’m ashamed.
I just wanted to buy more NVDA. It’s hard to separate. 🙁
just buy, then sell later to capture some capital. Then buy again.
Hi Sam,
Thank you for the daily briefings. I have a few questions regarding Tesla. I know I need to dive deeper into your analysis, but I was wondering if it’s okay to add more layers to Tesla at its current price. I understand you mentioned risk management and that we shouldn’t be adding more to Tesla at the moment, but I would appreciate hearing your thoughts on this.
Thanks,
So we have to balance risk management with the goal of making a profit. We have other ways to profit. Since we’re at 20% allocation now, we’re not going to add. Why? Because we can apply that capital to the QQQ instead and produce the return that we need to off-set any loss in Tesla.
As Tesla risk is concerned, we’re done. Tesla will likely rebound 30-40 points as we’ve seen historically. We probably end up with a gain. There are a lot of very strong reasons to believe this. But we simply can’t due to risk concerns. We’re simply too allocated.
We’ll have endless opportunities in the future to crush this same trade. So if we end up breaking even or even taking a small loss, that’s fine. What isn’t is if we take a big loss on it that will put us back 3-steps. Then we’re having to make it up. We want to end this correction with a gain. Our gaol is to push our portfolio to 2x by the end of this. If we add to tesla at this point, it could get in that way of that.
So that’s sort of our stance. Now after the rebound if we reduce our position and then the market sustains a second leg lower as we expect, there may be a big opportunity to layer in and out of it.
I am a strong believer in Sam experience trading TSLA for 20 years.
Hi Sam,
Have you ever traded the TQQQ as a leverage ETF for the QQQ. If you couldn’t add to a spread would you consider this?
I’m very limited in what I can say for trades we AREN’T doing. When going through the guideline, this type of question is right on the border of not acceptable for me to answer.
I can tell you this. Call options in generally are extremely dangerous and the various strategies aren’t equivalent.
For example, if we put on a call-option trade for the May expiration– instead of call-spread — its’ very possible that the call-spread would produce a gigantic return while the calls could produce catastrophic loses. They simply do not equate at all.
I know the common stock does for sure with certainty. If we make money on an OTM spread, then we’re making money had we made the same entries with common stock.
All I can say about TQQQ and other leveraged ETFs is to make sure you do a lot of research into it. Chat GPT is a really really good starting point. I use the $200 per month version of o1 pro and its various extensions.
Can’t say enough positive things about it. Really good starting point.
Then I’d ask your broker about them. the pros/cons and risks of using leveraged ETFs versus spreads.
Since I can’t possible research every alternative strategy, it’s hard for me to give any insight there. Though since this comes up often enough, I made do a deep dive into the QQQ’s leveraged ETFs soon to see if the work as an alternative.
—-
Methodology wise. Here’s what I do when I research leveraged ETFs. I go back in time and I look at correlations between the underlying asset and its leveraged counterpart. Then I see how they performed over different time periods. For example, how did each one perform mont-month. That’s really not hard to do.
You just look at the closing price of the QQQ at the end of each month and then look at the closing price of various leveraged ETFs. I did this with Nvidia and NVDL. Then you can go further and look at each week and just see if the ETF tracks.
Not all ETFs track. Sometimes they just suck big time like USO. And if the leveraged ETFs seems to work reasonably well and is highly correlated, then gives you your answer.
As for us, all we can really get behind is what we’re trading and the allocation.
Sam, there’s a copy-paste error on the Targaryen order ticket. Should it be 3 or 5 contracts?
Darn. It didn’t fill at 2.10 as it took off without reverting.
Yeah I filled at 2.23. Can’t always time it perfectly. Gonna try and get in at a lower price than Sam next time to even it out lol.
Lately it has been really annoying. Like I buy and then it goes up. Usually, it’s the other way around. The trade tickets just need to go out faster and everyone needs to buy iPhones lol
I’m considering buying an old one just for this. What’s the minimum requirement for installing the app ?
Not sure. I know we tested it down to an iPhone 15 and it works just fine on the 15. It’s more the OS. Unlike Android – where people can have all different levels of OS – the iPhone OS is always current as long as people update thier phones.
So for example, the iPhone 15 can run the current version of iOS no problem. I do know there is an old enough version of the iPhone that can’t. I just don’t know what that is. From ChatGPT:
As of March 1, 2025, the oldest iPhone models that support the latest iOS 18 are:
• iPhone XR (released October 26, 2018)
• iPhone XS and iPhone XS Max (released September 21, 2018)
These models are compatible with iOS 18, ensuring access to the latest features and security updates.
It’s important to note that while these older models can run iOS 18, some advanced features may require newer hardware capabilities. For instance, certain AI-powered functionalities introduced in iOS 18 might be exclusive to more recent iPhone models.
If you’re using an iPhone 8, 8 Plus, or X, these devices are limited to iOS 17 and do not support the latest iOS 18 update.
To ensure your iPhone is up-to-date, navigate to Settings > General > Software Update. If an update is available, follow the on-screen instructions to install it.
Keeping your device updated is crucial for optimal performance and security.
It’s 3 contracts.
Ok that’s what I thought. I see you corrected the qty on the ticket, but the targaryen ticket is still showing “Baratheon” :
> Targaryen Portfolio Trade
> Trade Executed: Buy to Open NASDAQ-100 (QQQ) May 16, 2025 $540-$550 call-Spread @ $2.10 x 3 Contracts in baratheon Portfolio
I need a new system. Going to automate this process soon. It’s too many damn things to fix. That’s another thing on my development list.
Setting up that damn ticket is so time sensitive. I think the best way is to have it automated. So we’ll do that. It’ll make it much faster too
You need to rest too. It concerns me.
Lol. Thanks! Sleep deficit cured today.
For the QQQ trade that was just put on, what is the acceptable price range for opening the spread in your eyes if you had missed it at 2.10?
I am trying to fill at 2.50 in post market. We have a few minutes.
Nop. I am not allowed to put options trades after hours. I’m out for this one.
So we’d probably buy within a $0.20-$0.25 range of our entry. Remember, we bought at $2.50 with the QQQ at $504. We made that trade when the QQQ was in the mid $499’s. Basically a buy at $500.
So are we selling Reddit or nah?
Nope. too late for that. We would do that as a way to roll our capital into the QQQ. We should have been more aggressive. I’m just naturally reserved on these trades. If the QQQ had pushed down to $493 this morning, we would have gone heavy.
Thanks. I wasn’t able to add to QLD today as I was driving and by the time I got back the opportunity had passes. Luckily I did add a bit yesterday after market knowing that I would likely need more because I’m not dealing in spreads. Hopefully this will be enough to get some return. If we drop below 500 again next week, I will add more if we have not sold by then.
Thank you Sam for the week. See you all next week rally.
Thanks bud. Have a good and safe weekend.
Does this price action in the QQQ at the end of the day signify anything in regards to the bottom or is it just fluff and “meandering”? Interesting that QQQ has decided to rally quite significantly into the closing on a Friday, right after a harsh sell-off (like you mentioned earlier in your Daily Briefing article).
Nope. Not meandering anymore. This is precisely how a bigger rebound starts. The only thing I don’t like about it is that it happened at the end of the day instead of at the beginning of the day where the QQQ might expand on the gains.
Do you think a trailing stop loss can help or it causes more problems? looks like a squeeze on shorts and more downside to come next week.
Stops only really work with individual stocks and with we’re trading momentum. There’s not enough liquidity for stops to work with options.
Could you explain why you don’t like the start of the rebound at the end of day? Uncertainties over the weekend, or are there other reasons?
Hi Sam, I understand that technical analysis is not predictive but reactive, but do you suggest there is strong evidence we will have a rally rather than a rebound followed by another lower leg? I see the terms rally and rebound both used throughout your analysis and I’m a bit confused. Thanks!
I think we’re gonna have a rebound that lasts a few days. We’ll have an opportunity to close out our positions during that rebound. And then I think we’re going to see another big leg down and that will be it. I think we might get down to around 480 on the QQQ’s. That’s a standard 10-12% correction. That’s what should’ve happened when we peaked in December.
After that, I think we take another big intermediate-term rally all the way up to $600 or there about.
That’s our expectation right now. And the reason for that is quite simple. Everyone is always going to be perished during corrections. I can’t even begin to count how many corrections I’ve been through and every one of them get fully developed in hyper-bearish sentiment.
People make all sorts of arguments for why the stock market has peaked every time we have a correction.
The reality is bear markets only happen once every 7 to 8 years. We’re only on year 2 1/2 of the next bull run.
It only just started January 2023. We’re not even at 2 1/2 years.
And this is coming off of a 40% bear market.
That bear market had very strong fundamental reasons behind it. That surge to 10% inflation was insane.
What do we have today? A PCE number that came in line and a long-term declining inflation rate. We are likely getting to the Fed target. We may have weakening growth, but nothing major. Sure we might have a small recession. But that is a might have.
Overall, the economy is strong, and I don’t see any good reason for there to be any sort of a bear market.
We were gonna start getting more defensive at around 600 on the QQQ. Mostly because that is a 50% move above the prior highs.
But even then, as a default rule, we are always bullish. Hedge the bear, ride the bull is our defining principle.
When you consider the totality of the circumstances, that is the perspective that produces generational levels of wealth.
Imagine if somebody took that perspective at the end of 2009 and simply remain along through all of the bullshit for 15 years. They would be up massively.
So that is the key.
When I say we’re gonna get defensive, I mean, we’re going to take our hedges a lot more seriously and we’re gonna be more aggressive with our insurance.
For the trading portfolio, we’re going to assume that every correction that comes may turn into a bear market.
Anyway, to answer your question, we don’t think this is gonna go further than two leg down.
Most likely the market will be at a ties come May. If it bottoms by mid March, then after two months of rallying, we will definitely be at all-time highs.
If you look back to the August correction, the market almost retraced all of the losses in just 2.5 weeks.
That was a 16% correction. All of the losses almost fully retraced in just 2.5 weeks.
We’re probably not gonna be holding May expiration by then. But we could and we’d probably pull it off.
Thank you for your detailed explanations. I understand much better now!
Hi Sam, is it possible that we won’t get a second leg lower and that the bottom was already in this morning at 496? What makes it more likely that we do get another leg lower to 480?
So the size of the first leg down is what increases the likelihood of a second leg lower. Usually when you have a heavy sell-off like that, it doesn’t happen in isolation. But that’s just a general rule. It’s not a certainty or anything like that. However, a heavy first leg down makes it far more likely we see a second leg lower than not.
Sam, thanks for the great insight. One question tho: Will the tariffs that are supposed to take effect on March 4 put a stop to the rally, or are they already priced in?
Unless there’s an unexpected escalation or a change in policy, their actual implementation might not have a significant impact on the rally. Tariffs have already been priced and the market has already absorbed the news, the focus may shift to other catalysts like earnings reports or interest rate expectations.
^Agree. Couldn’t have said it better myself. Known information is immediately priced into the markets. No one is going to wait unit the actual implementation of the tariff and then decide to sell-off the market.
And the reality is the market isn’t entirely driven by fundamental news. That’s because the market could be pricing in some other future event that we’re not even aware of at the moment.
It certainly won’t “prevent” or “stop” a rally. Whether the market rallies or not has a lot more to do with supply/demand and other factors than with fundamental news. Suppose, for example, a fund receives $3 billion in new subscriptions and suppose that fund tries and track the S&P 500 with a large portion of its capital vis-à-vis closet indexing. That fund is going to step in and buy. That buy adds demand for risk assets and market fundamentals have nothing to do with that. That’s just one example.