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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I see that QQQ when thought the 512 resistance down in the 510, RSI going towards soon oversold on the hourly. Are you going to make the first trade for the challenge in this small pullback?
If we do put on a trade, it will be with leaps. We’re going to wait to put on a full blown spread trade in a correction because a full 10% correction will lead to a high probability double. Remember, the goal is 8 consecutive doubles over 4-years with smaller returning trades in-between those trades.
So we probably wouldn’t do a spread trade. We’d probably look to buy some QQQ leaps perhaps and capitalize on the near-term rebound.
We just have to be extra careful because when the correction does happen, the first thing we’re going to see is oversold QQQ just like we saw in July-August. It doesn’t take much for the QQQ to go right into a correction after becoming oversold. That was why we ended up holding off. The action just looked to dangerous last time.
Here, I think it’s unlikely to look like that. If the QQQ pushes oversold here, we’re probably safe going long on a near-term trade. The circumstances with the breakout above $500 are very different right now.
Would you consider TQQQ instead of QQQ so that doubling is quicker? I know leveraged ETFs are super risky but in a truly oversold situation, I feel like this could be OK
So once we trade spreads, the return profile is pretty set. Being in a leveraged ETF does’t necessarily help much and it could hurt due to lower liquidity and higher volatility cost to hedge.
If you’re talking just as a pure long-only trade (non-spread situation), I’d still rather just buy leaps in the QQQ itself to limit risk.
Let me give an example. Suppose the QQQ pushed down to $500 a share and became oversold. We have some confident that the QQQ is likely rebounding to $520, but we’re not especially confident in the outcome as we might be in a correction.
In that situation, we might buy the January 2026 $520 calls at $49-$50. On a $20 rebound, that position might rise $15 or 25-30% leading to a $1k gain.
With a levered ETF, it’s far more sensitive to price movement and creates far more risk than we want to put on at the time. We have to consider the downside risk here. If the QQQ falls 2%, the levered ETF is going to fall double or triple that which in turn leads to a drastic move in the leaps.
As the QQQ is concerned, we’d probably stick with QQQ options
I know this is a purely speculative question, but how much do you see CPI having an effect on the market? Sometimes it’s almost a non-event. Then again, sometimes the market moves 2%.
Are there precursor signals that could indicate whether CPI will less or more of a market mover?
I think unless the CPI misses, it’s unlikely to have a drastic impact this time around. It would need to set off alarm bells to have any impact. If inflation comes in less than expected, it probably marginally pushes the market higher.
The market isn’t hyper focused on inflation like it once was.
Sam, do you look at BTC? If you do I would love to get your thoughts on it.
Curious if you’d be interested in posting a SW Watch List. Are you looking at any other sectors besides tech, such as space (LUNR, RKLB)?