Samwise Quick Reference Handbook
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So are we not expecting NVDA to still pull back to the low 120s?
it may come next week, rumor has it that the ER will not be favourable
Isn’t that the case every quarter?
I have the same question, this hasn’t really pulled back
So as we’ve mentioned. Nvidia reached extremely overbought conditions. It will eventually pull-back sharply. 12-20 points from a high point. Where that high point ends up being and when it actually pulls back is uncertain. From a probability point of view, it’s highly probable we’ve reached that peak already at $137.
We should see a sharp pull-back fairly soon. It could be holding up for earnings. But the end result will be a sharp pull-back at some point fairly soon.
Even setting aside near-term overbought conditions, it has been on a single continuous line up from $94 un to $137. That’s a large return without retracement. It’ll have to retrace some of the before moving ahead.
In terms of a pullback, where are we now in number of days? You said it’s usually 5-10 days or something like that?
QQQ briefly touched 37 RSIh l, I guess it’s not really enough to fulfill it’s pullback.
Follow-up question : is this pullback toast?
Sam mentioned in this article a few days ago that we are on the second segment of the rally that began in May and that we are due for a pullback. Whether the ~2.25% pullback we just saw that lasted a few hours was the anticipated pull-back, this is something we will just have to see (though probably unlikely).
Based on the article linked above…
The average segment within an intermediate rally:
Price & Start Date:
◦ —
Price & End Date:
◦ —
Duration (Trade days):
◦ 12
Gain:
◦ 8% to 10%
The average pullback within an intermediate rally:
Price & Start Date:
◦ —
Price & End Date:
◦ —
Duration (Trade days):
◦ 3 to 7
Gain:
◦ -3% to -5%
Comparing the above with this intermediate rally, we can see that the gains are strong and they are within the above expected duration of a segment, but the following pull-backs are lacking…
First Segment (Among top 3 largest segment since Jan 2023)
Price & Start Date:
◦ ~428 | Monday April 21 2025
Price & End Date:
◦ ~491 | Friday May 2 2025
Duration (Trade days):
◦ ~10
Gain:
◦ 14.4%
First Pullback (Amount 7 smallest pull-back for sub 3%)
Price & Start Date:
◦ ~491 | Friday May 2 2025
Price & End Date:
◦ ~477 | Wed May 7 2025
Duration (Trade days):
◦ ~4
Gain:
◦ ~ -2.88% **This is low!**
Second Segment (Above the average of 8.67%; within top third of segmented rallies.)
Price & Start Date:
◦ ~477 | Wed May 7 2025
(Potentially) Price & End Date:
◦ ~523 | Wednesday May 21 2025
Duration (Trade days):
◦ ~13 or 14
Gain:
◦ ~9.65%
Second Pullback (if already concluded)
Price & Start Date:
◦ ~523 | Wednesday May 21 2025
Price & End Date:
◦ ~511.30 | Wednesday May 21 2025
Duration (Trade days):
◦ ~0 (a few hours) **This is low!**
Gain:
◦ ~ -2.25% **This is low!**
Why there should be more downside:
The second pull-back has not met the requirements for the duration and gain of an expected pull-back.
If that was the second pull-back, not only would it be another sub 3% pull-back like the first one, but this time it didn’t even last more than a few hours (it should take 3 to 7 trade days on average, but Sam mentions “3 to 5 sessions” in today’s article probably due to the strength of the rally ending the pullback sooner than expected).
Sam also mentions that missing an expected pull-back generally is applied later on in another pull-back.
The typical segmented rally pull-back lasts 3-7 sessions and 3-3.75% (low end to average). High end it’s 5%+.
For Nvidia, it’s 12-20 points.
So far, the QQQ pulled back a total of 2.25%. That would be a record low for a pull-back. The smallest previous pull-back was 2.53%.
Sam, I appreciate all the information and learning opportunities you provide. For those of us following you and looking for the NVDA pull back to the low $120’s, what is your current thinking regarding pull back and price targets? Will we see a pull back and if so how much do you project it would be and in what time frame (before earnings, right after earnings, beyond the earnings window)? Do you have updated price targets and time frames for those targets?
So as we outlined last week, the typical Nvidia pull-back goes for 12-20 points. That’s what we’ve seen historically. If you look at each time Nvidia reached overbought conditions on the hourly chart this past year, that is precisely what has followed. A 12-20 point pul-back.
More important than price-target however, is whether Nvidia reaches oversold conditions. Oversold is key because it sets up a high probability for a 10-20 point rally.
So we really want to re-enter the spreads we closed at oversold conditions on the hourly.
Right now, Nvidia is at the mid-line (46 RSI). We’d like to see that drop under 30. It may not happen until after earnings. We’ll have to see. We do know it has stalled exactly where it should stall after having reached overbought conditions. Often consolidations like we’re seeing lead to a sell-off.
So Nvidia is set-up to sell-off a bit. In terms of hard price targets ahead of time, that’s harder to say.
We know there’s a support at $122-$123. So that’s a logical place to go. But once Nvidia reaches oversold, it is liable to rally at ANY moment. There’s a balance of risks there. For example, if Nvidia pushes down to $126 and reaches oversold, it’s risk to wait until $122 because it’s oversold. You have to balance all of those issues.
Thank you Sam.
When I see that, I tell myself that the correction is near! ????
Doesn’t make sense to me that it nears oversold, I mean we are barely off the highs after this crazy rally?
In terms of getting back in our NVDA spreads we just have to hope it does indeed drop some more right?
This SPY specially neared oversold this morning. Not the QQQ, Nividia or other indices/stocks. We’re talking strictly SPY on the hourly.
Also, oversold is always relative to the preceding trend. So it’s not hard for a stock to become oversold if the move is sharp relative tot he pretending trend.
The SPY and QQQ have been trading in a tight narrow range for the last 5-6 days and then it quickly sold-off.
——
We’ll get back into Nvidia spreads once it pulls back into oversold conditions. We really need oversold on Nvidia becuase that set-ups a high probability for a rally.
Ah ok! Thank you.., still lots to learn I guess:)
Does July 18 expiry still favorable?
since the data is pointing to a likely correction coming july/aug
Would it be safer to get an earlier expiry like late June?
Always keep time on your side, if it peaks in June, you sell. There really isn;t benefit from a risk standpoint to going shorter dated. That is a lower cost, higher risk move.
Just like that — QQQ $504 as of 9am EST
NVDA $129
Did QQQ hit oversold?
Not yet.
Are we going to close the short positions at or near the opening?
We’re not in a rush to close those out given the overall circumstances. We’ll probably close them out if the QQQ pushes down to the low $500’s as we expect. If we can close them out at $12.00, that makes a lot of sense. $7.55 gain.
Notice the analysis we laid out yesterday doesn’t change. There’s very likely going to be a critical point where those September calls gets down close to worthless due to the overall set-up.
Chances are the QQQ will sustain a correction after reaching $560-$565 in the best case scenario. From there, it will time out to fall way out of the money with only weeks left until expiration. That’s at best with the QQQ having rallied nearly 100-days.
That set-up tells me that we should wait for optimal circumstances to cover. In this case, its would be the QQQ testing $500 a share and/or the gap-line. Really, oversold is the most important thing here. and we’re not quite oversold yet.