Samwise Quick Reference Handbook
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I see the market heatmap is mostly red, this should drive $NYMO down significantly. But it was only at -33 last Friday.
If you have access to intraday data, could you update us on NYMO throughout the day?
Thanks
It’s not oversold at all. -55 right now. No capitulation conditions at the moment. But we also don’t get -100 NYMO at every bottom. It’s not a necessary conditions. It is a sufficient condition. When it happens, it leads to a bottom. But not all bottoms happen that way.
Sam just want to get your insight that this downturn still has nothing to do with Trump and that it’s just the news cycle timing
So it’s not that it has NOTHING to do with Trump. Of course Tariffs and Trump will have some level of impact. It’s more that the correction was telegraphed LONG before Trump even entered office. From a cycle standpoint, it was going to happen and then something will be attributed to it.
For example, after this correction ends and we have a long rally, we will forecast a correction and we’ll forecast pretty accurately within 1-2 months window. As we did in December.
That’s because there’s a clear-cut rally-correction cycles we’ve seen over and over again. For decades. The market doesn’t’ go straight up. It rallies for 70-100 day and then it sustains a correction. We never go much past 100-days. That’s like the outside maximum.
The 100-day mark was the end of January. hence why we forecasted a correction by late January. Long before we had any notion of tariffs.
Hello Sam,
Last week i thought that we can see NVIDIA again between 90$ – 105$ and you said it’s not possible.
Are you still feeling this ?
Why NVIDIA is still going down despite of Jensen good news ?
Any chance to see high rallye to 140$ before earnings in May ?
Best
Karl
Last week i thought that we can see NVIDIA again between 90$ – 105$ and you said it’s not possible.
So we don’t think nor do we think it is likely. That’s very different than not possible. Anyting is “possible” in the stock market.
Nivida could get down under $100, but I doubt it spends very much time down there. As you can see, the market has fallen 15% now and Nvidia is STILL trading above $100.
That should tell you just how resilient the stock is and how much support there is at the $100-$110 range.
Consider this. The QQQ has made $7-$8 new lows and Nvidia hasn’t. That should tell you where the strength is in the stock.
Nvidia follows the whole stock market. The stock market goes down, so does Nvidia. Nvidia is correlated with the market. If the market rallies, Nvidia rallies and vice-versa. Nvidia does it bigger. So if the market rallies 10%, Nvidia rallies 30%.
Yes. If the market bottoms and begins to rally back toward its highs, then sure. Nvidia could easily rally to $140 by that time. It has done it before multiple times.
But as of right now, it’s probably less likely to happen. We’re talking a near 40% move right? I wouldn’t invest based on that outcome. However, from a timing perspective, we probably do see Nvidia rally fairly soon because the correction has now lasted 29-days.
So we’re a lot closer to the end than to the beginning of the correction which means the market is gearing up to bottom soon and that will open up a path for Nvidia to craw back to $140+.
Thanks Sam !
Did the rebound start in the middle of the session to reach $115 or is it still a counter-movement while waiting for the announcements of 02/04 and see a lower level remain around $90-$105?
Best
Karl
Moreso seeking clarification related to your briefings,
1. Since the QQQ hasn’t reached a 50% retracement and the daily briefings have shifted from Rally Day Y to Correction Day X, does this suggest we could see around 15 trade days between RSI-30 and the bottom, indicating we’re still in a correction despite today’s expected intraday rally? This correction has shown unusual behavior compared to averages of previous corrections.
Additionally, with new lows, doesn’t that imply the actual 50% QQQ retracement is likely below 500-505? If this is the probable correction bottom, why would the 50% retracement matter unless we’re anticipating near-term uncertainties, which could lead to a retracement past 50% as the market gets tired of selling?
2. Anyway, the VIX and NYMO are not exceeding past previous near-term peaks/bottoms (~29.60 and ~-58.00) despite the QQQ and SPY making new lows. Despite the day not over yet, it seems kind of like a stretch that the VIX and NYMO will past those near-term values respectively in 1 day considering it indicates no major worries the market is making new lows no?
Not sure I understand the questions. Let me answered based what I’m I’m inferring:
(1) We shifted to discussing the correction days because when we were rallying it was not yet clear whether we’d see a second leg lower. It’s to keep a fully accounting of how long the correction has lasted.
No. Why would that be the case? If the QQQ reaches oversold tomorrow, then it’s oversold tomorrow. As we mentioned in the Daily Briefing today, the 2nd leg down is likely to be both SMALLER and LOWER duration than leg 1. Leg 1 lasted 3-weeks and went for 75-points. This one has thus far lasted 4-sessions and 35-points. And here we are nearly oversold again on the daily. There’s no chance the QQQ is going to fall another 40 points over the next 11-days given how close it is to oversold. Chances are we bottom THIS week. Either because there’s a clearcut reversal indicating incremental new lows or becuase we reach oversold conditions on the daily again leading to a clear-cut rally. what’s more, the first rally only went for 6%. that’s way way below the average for a post 30-RSI rebound. Meaning, we’re due for a larger rally. If the QQQ reaches oversold agin, it’s going to run 15%+. We’re not going to get back to back 6% rebounds off of oversold conditions.
Today’s intraday rally is a near-term indicator. It has only very limited impacted on the final overall trend. Here’s where today’s intraday rally COULD have an impact on the entire correction. If the the QQQ and SPY rally more than 10-points due to having become deeply oversold such that it is clear that a low-point is now in for hte market, then it could lead to something bigger.
But for now, all we can infer is that we’re likely to see a $10 bounce next because we’re so deeply oversold near-term (hourly). It’s why the QQQ hasn’t fallen 18-20 points like it did a few weeks back. The bleeding stopped at $457 and we’re still deeply oversold. We’re still sitting at sub-20-RSI. That means the market is eventually going to push up to around $470 here soon.
That rebound could have an impact on the trend. We’ll have to see how we close on the daily chart and what follows after that.
Not sure I follow here. But let me see if I can get what you’re asking here. The 50% retracement level was at $503 after the first leg down. Leg 1 went from $540 down to $465 or $75. The 50% retracement after leg 1 was $37.50 or $502.50 or thereabouts. Right around $503 a share.
We reached $493 and the RSI didn’t go past the mid-line. Both are key issues.
The 50% retracement no longer matters anymore. It only matters when we’re talking about rally targets between legs in a correction.
The next rebound that we see, we’re not really interested in 50% retracement anymore because whatever bottom we get in this leg down is likley to be too short for there to be a real continuation. Meaning, this correction is likely 2-legged and now our targets have shifted really toward all-time highs. Meaning, once we get a bottom, our expectation is a rally back to the highs.
50% retracement would have mattered had the QQQ reached the 50% mark the first time leading into a second leg lower. But we don’t have that anymore.
Now we’re just looking for a market bottom here fully. What I think will likely happen is we get two (2) close succession sub-30-RSI set-ups. When that happens, we’re generally at a bottom.
Tariffs simply don’t have large enough impact to put us into a bear market. that’s the really. And so we’re probably looking at bottom here pretty soon.
—–
The $VIX and $NYMO are not going to extreme today nor does it seem like the market conditions really point toward there being any major $VIX/$NYMO events. There are a lot of implications that can be drawn from that.
However, it is important to reiterate that the $VIX & $NYMO are only sufficient conditions for a bottom. They’re not necessary. We don’t need to see either reach any significant high point for the market to bottom out.
It’s more that when they do flare up, they indicate capitulation. Capitulation is not even necessarily correction ending either. Capitulation is more LEG ending than it is correction ending.
For example, we saw capitulation twice during the 2022 bear market — once really early during leg 1 and again during one of the last legs in September 2022. We didn’t see it again at the final lows. the final lows happened with very little volatility or fanfare to be honest. It was a double-bottom set-up that ended the bear market and it was not a high volatility event. Just a regular down a few points day that ended it.
Capitulation is more a direct indication that we’ve bottomed near-term for whatever leg we’re on and that a major rebound is beginning. It often DOES lead to the end of corrections because most corrections are 1-2 legs. So if it’s happening on leg 1, 2 or leg 3, then there’s a good chance we’ve bottomed. If it happens in later legs, then it’s a very high chance for a bottom. But that’s only coincidental because the leg has ended.
Still, you don’t need to wait for the $NYMO to reach extremes or anything like that. If it reaches extremes, then great. We have a bottom. But we could easily see the market bottom without it.
Thank you for covering all bases with your detailed answer. Reading your reply, I can see why I was not clear enough, but you still managed to provide enough detail for me to pick apart anyway!
I think this is already obvious that the QQQ isn’t likely to fall 40 points based on the technicals you have already brought up. Although you already mentioned it last week, one of the datapoints I was seeking extra information on what was a weak 6% bounce that has already happened failing the 50% retracement, and I believe it only did this one other time in the past and that was during the 2022 Bear Market when I take a quick look at your correction table. I know you have already pointed out the difference between this correction and previous corrections, so no major concern there. I did ask in the past if you find this particular correction to be an outlier and its significance to future correction tables and got an alright answer from you.
I appreciate your explanation on near-term movements and projections based on sufficient conditions.
Tariffs do not concern me, but I find it helpful and nice that you re-iterate this point over and over again for those that are deeply concerned. With that being said, I am curious what your opinions are on international sentiment on American tourism and goods in the short-term seeing as how summer is right around the corner? You touched point with stocks in general last week in the comments (thanks), but I am wondering about what your general thoughts are irrespective of the stock market.
Honestly, sometimes I feel like I can sense perhaps frustration from your replies when tariffs, Bear Market, the market going to 0 are mentioned in the comments, and it’s understandable why with your over a quarter century of experience that it isn’t the end of the world. Sam, I am looking forward as much as you are for the cheering AI NYSE Leonardo or some bullish variant thumbnail to come back to the Daily Briefings in the near future.
Keep up the amazing work Sam! I really love how technical, funny and casual you are in your Daily Briefings and comment replies.
Maybe you’ve explained this and I’ve just missed it, but I’m a little confused what you mean by the end of the correction.
Does the correction end once the market is back to where it was before it started? Or is the 50% retrace the end of the correction?
Meaning the market will have bottomed and begun a new rally back toward its highs. At some point, we will reach a bottom and then go on a multi-week rally where the market goes up nearly every day.
When this correction ends, that’s how it likely unfolds. The same way we’ve seen it unfold after every previous correction.
Can we get a worst, best, and likely exit strategy update on the QQQ spreads? Last I remember we were going to exit at 500 but that didn’t happen.
If we don’t hold 460 for example, then what?
Thanks, Sam!
So we’re going to try and exit once the market bottoms and rallies. There’s no point in exiting down here because there’s nothing to be gained from that.
Our exit strategy is waiting for the rally to exit. At 29-days, the correction has gone on for a quite a while now. We have about 35-days until expiration.
As you’ve seen after the end of previous correction, the true actual rally could be extremely explosive.
For example, after the August correction ended, the QQQ rallied $62 in just 13 days. That’s 14.7% in just 13-sessions. That would be like the QQQ rallying to $520 here in just 13-14 days.
And remember that correction was now in-line with this correction. They’re both about the same size now. So we’re waiting for that rally to play out.
Notice that if the QQQ reaches anywhere near $510-$520 with a few weeks to spare, the spread will be worth a decent value and we could see that happen if the correction ends.
If the QQQ spread ends up failing, we’re still invested heavily enough in Nviida and other postions for our portfolio to be whole. It will just set us back time. But we’ll still be in a position to succeed in the portfolio as we’re holding positions that can easily yield us sufficient gains to put us in a positive heading.
This is the problem with trading and it is precisely why we’re allocated 5/10% in baratheon and targaryen.
All of our long-term portfolios will end up very very deep in teh green. They’re well hedged and work over the long-term.
I think the big lesson I learned here is that I should have just added these trades to the long-term portoclios instead of creating individual portoflios and we may very well do that once baratheon and targaryen are made whole.
once those portfolios get back to even, we probably close those two and add the postions to the other long-term model portfolios.
I’ve read too many comments that seem to indicate that people are far more invested in short-term trading than they are long-term which is just a huge mistake. Really, trading rarely outperforms long-term investing. I’ve learned that over years.
There are some big home runs I’ve hit in short-erm trading that I’ve then invested into the long-term. But consistently, long-term investment strategy are substantially stronger.
Like all of our long-term portfolios will weather this correction without issue at all and then go on to produce massive returns.
For trading, there’s a lot of ups and down because things don’t always play out as expected and that’s what’s required for trading. When things don’t work out as expected with the long-term portfolios — they’re not only hedged — but long-term, everything always moves higher
Thanks, Sam. I, for one, am here for the long-term investments.
However, I did accidentally over-allocate the QQQ trades due to my error. Hoping to exit them and minimize the loss and your transparency is greatly appreciated.
Sam, that makes sense re: Baratheon, but for Targaryen, wouldn;t it make more sense to keep it seperate as it’s objective is clear cut and it’s an isolated endeavor?
Sam, planning to make any trades today? I am tempted to add to the QQQ spread down here, specifically the May 525/535 trading at under .30 at the time of this post.
we’re not adding. if we didn’t, we’d be buying June/July expirations and we would buy spread closer to the money. that’s how we’d do if we were adding.
For now, we’re just in wait mode.
Thanks, can you help me understand why wait mode? Are there other risk you see? From the post you seemed very bullish and when we got down to ~480, it was buy buy buy, now we have another ~20 point drop and sitting out waiting?
Oh so when I say we’re in wait mode, I mean we’re not selling or closing position right now.
We’re simply waiting for the rebound to reposition.
In terms of where we’d put on new trades and/or add to positions in our portfolios, we would do that once the QQQ reached oversold conditions on the daily chart again — if it happens at all.
hi Sam,
I remember in a post awhile ago I think you mentioned that when a correction ends, usually the full recovery follows the same amount of time it took for the selling to bottom out.
what I’m curious about is has there often be times where this deviates from normal and what are the odds this could affect the QQQ call spreads in your opinion?
There are always outliers. We’ve now seen a clear-cut outlier in this correction in two distinct ways. One, this correction has thus far lasted 29-days which is in the top handful of corrections. There aren’t many that go beyond 28-days.
Also, the post-30-RSI rebound only went for 5.96% with is at the extreme low end of the spectrum. It has happened before, but not typical. we usually get closer to 12-15%. That’s the median rally after a 30-RSI.
One good thing that comes from that however is that we’re very unlikely to see that again. If the QQq reaches 30 again, it will almost certainly rebound aggressively toward the median sized rally 12-15%.
I don’t think we’ve seen it happen twice in close succession. Meaning, we haven’t seen two back to back RSI events lead to two back to back failures. If anything, the first failed attempt drastically increases the probability that next setup results in a larger rally.
That’s true in both the daily and hourly time-frames. It’s a big reason why I think we probably bottom out this week.
gotcha that makes a lot of sense. ????
Hi Sam, around Feb. 18 we were expecting a big rally coming because of the highs the market was making. Given that we were also anticipating a correction in late January back in December, should we have considered de-risking more then? This is more for my learning going forward.
Aside from tariffs, it seems that economy might be slowing (unemployment and slower spending seem more longer term concern than tariffs). Even if Fed were to lower rates, is there a risk of bear market?
On NVDA, should we be concerned about export controls, threat of Taiwan invasion, and the notion that NVDA might be over owned and thus few buyers left even as it grows earnings? Thanks very much, Sam. Appreciate the education you provide.
Someone having problems on the app (android) ? stuck on briefing.
Same here
all good iOS
With NVDA’s hourly rsi already near 44 to end the day, does this change your outlook on a likely rally to $115?
Hi Sam,
Would you consider to start a 100% return 1-year call-spread strategy & 400+% OTM 1-year strategy portfolio model anytime in the future?
i found this under 4.4 stock replacement section & am very keen on this
Tbh we already have 2 trading portfolios and it takes up quite a bit of the daily briefing, I don’t feel like we need an additional 2, just my opinion!
Go TSLA!!
https://www.gobankingrates.com/money/business/warren-buffett-acquires-elon-musks-tesla-for-1-trillion-in-cash
April Fools lol